A trader from morgan stanley capital offers you a 30 year


A trader from Morgan Stanley Capital offers you a 30 year bond, having an 8% coupon rate, and Par Value (i.e. Face Value) of $1,000. The market rate is 4.25%. If the bond offers quarterly coupons, what should you pay for that bond today? Assume no transaction costs. (Hint: Use Excel’s PV function, and the annuity discounting formula for pricing this bond – please show all steps.

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Financial Management: A trader from morgan stanley capital offers you a 30 year
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