Problem: Assume the following information for an existing bond that provides annual coupon payments:
Par value = $1,000
Coupon rate = 11%
Maturity = 4 years
Required rate of return by investors = 11%
1) What is the present value of the bond?
2) If the required rate of return by investors were 14% instead of 11%, what would be the present value of the bond?
3) If the required rate of return by investors were 9%, what would be the present value of the bond?