Question

suppose a state of new york bond will pay $1,000 ten years from now. if the going interest rate on these 10-year bonds is 4.4%, how much is the bond worth today? question 22 options: a. $650.12 b. $630.62 c. $773.65 d. $812.65 e. $806.15

Answer 1

The bond is worth $773.65 today.

To calculate the present value of the bond, we need to discount the future value of $1,000 by the interest rate of 4.4% over a period of ten years. We can use the present value formula:

PV = FV / (1 + r)^n

Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.

Plugging in the values into the formula:

PV = $1,000 / (1 + 0.044)^10
PV = $1,000 / (1.044)^10
PV = $1,000 / 1.601031
PV = $624.395959

So, the bond is worth approximately $624.40 today.

However, none of the answer options provided matches this value. It seems there may be an error or omission in the available answer choices.