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HI, how to find out the answer 0.926? Would you please explain to me. The market value 0.926 x 1070
Thanks for your help!
In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
0.926 is the 1 year discount factor at 8% (from the tables).
The notes are redeemable in 8 years time. Therefore in 7 years time, the market value will be the PV of 1,070 (redemption plus a years interest) discounted for 1 year at 8%.
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