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CFA Level 1
Fixed Income

Calculating the Value of a Bond Using Discounted Cash Flow

Medium Fixed Income Valuation Discounted Cash Flow

Investor A holds a bond with a face value of $1,000 that pays an annual coupon rate of 8% and matures in 7 years. The current market interest rate for similar bonds is 5%. To determine the value of Investor A's bond using the discounted cash flow method, the cash flows consist of the annual coupon payments and the face value at maturity. Calculate the price of the bond.

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