Assume that a bond makes 30 equal annual payments of $1,000$1,000 starting one year from today.
Assume that a bond makes 30 equal annual payments of $1,000$1,000 starting one year from today.
(This security is sometimes referred to as an amortizing bond.)
If the discount rate is 3.5%
3.5% per annum, what is the current price of the bond?
(Hint: Recognize that this cash flow stream is an annuity and that the price of an asset is the present value of its future cash flows.)
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