How much is a bond worth if it pays 20 in coupon payments at the end of each year for 4 years and 1,000 at the end of the fourth year, if the interest rate is 5?
A) 822.70 B) 893.62 C) 1,070.92 D) 1,080
Question 2
The price of a financial asset should be equal to
A) the face value of the asset divided by the interest rate.
B) the present value of payments to be received from owning that asset.
C) the face value of the asset.
D) the present value of the sum of the coupon payments and the interest rate.
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