You just purchased a $1000 par bond for $982.09. The current market interest rate is 10%...
You just purchased a $1000 par bond for $982.09. The current market interest rate is 10% and the bond pays a coupon of $90/year. You intend to hold the bond until maturity - 5 more years. How much will you receive for your bond in 5 years?
Homework Answers
Information provided:
Par value= future value= $1,000
Time= 5 years
Yield to maturity= 10%
Coupon payment = $90
The price of the bond is calculated by computing the present value.
Enter the below in a financial calculator to compute the present value:
FV= 1,000
N= 5
I/Y= 10
PMT= 90
Press the CPT key and PV to compute the present value.
The value obtained is 962.09.
Therefore, the price I will receive for the bond after 5 years is $962.09.
In case of any query, kindly comment on the solution.
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