Investment Assignment | Professional Writing
May 21st, 2020
(Bond price over time) 3M Corporation has outstanding an issue of $1,000 face value, 8 1/2% coupon bonds that mature in 15 years. Today, investors require a 14% rate of return. a. Calculate the price of these bonds today. b. Calculate the price of these bonds 5 years from now if market interest rates do not change.
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c. Calculate the price of these bonds 5 years from now if investors’ required rate of return declines to 11%. d. Calculate the price of these bonds 14 years from now assuming investors’ required rate of return: (1) declines to 10%. (2) remains at 14%. (3) increases to 18%.
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