A

PV of Perpetuity = — r where A is the perpetuity. The most common example offered for a perpetuity is a console bon. A console bond is a bond that has no maturity and pays a fixed coupon. Assume that you have a 6% coupon console bond. The value of this bond, if the interest rate is 9%, is as follows:

The value of a console bond will be equal to its face value (which is usually $1000) only if the coupon rate is equal to the interest rate.

Stocks and Shares Retirement Rescue

Stocks and Shares Retirement Rescue

Get All The Support And Guidance You Need To Be A Success At Investing In Stocks And Shares. This Book Is One Of The Most Valuable Resources In The World When It Comes To

Get My Free Ebook


Post a comment