A coupon bond that pays interest semiannually has a par value of $1,000, matures in 8 years, and has a yield to maturity of 6%. If the coupon rate is 7%, the intrinsic value of the bond today will be .

$1,062.81  

Explanation:

The intrinsic value of the bond today is the present value of semiannual coupons for 8 years(16 semiannual coupons) and the face value of the bond,which is computed below using financial calculator and excel pv function:

Financial calculator:

N=16( number of semiannual coupons in 8 years=8*2)

PMT=35(semiannual coupon=face value*coupon rate*6/12=$1000*7%*6/12=$35)

I/Y=3(semiannual yield=6%*6/12=3%)

FV=1000(face value is $1000)

CPT PV=$1,062.81  

Using excel PV function:

=-pv(rate,nper,pmt,fv)

nper and N above are the same with other variables having the same name

=-pv(3%,16,35,1000)=$1,062.81  

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

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