Chapter 6 easy review questions Flashcards Preview

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Flashcards in Chapter 6 easy review questions Deck (5)
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1

How do you calculate the price of a bond

- is the FV
- shown as a negative in the calculation?

2

What is interest

it is the coupon rate

3

what is interest used for

to calculate the payment

4

ex. 1000 par value bond based on a 6% coupon rate, paid annually

if it was paid semi-annually

1,000 x 6% = -60 PMT

.03 / 2 = 0.015 x 1000 = -15 PMT

5

what is interest market rate

used to calculate I/y

annually 3% = 3 I/y
semi-annually = .03 / 2 = 0.015 I/y