Question

2. What's the value to an investor of a $1,000 par value bond with an 8 percent coupon rate when the investor’s required rate of return is 15 percent?

a.   Great than $1000.

2. Less than $1000.
3. $1,000.
4. There is not enough information provided to answer this question.
5. None of the answers listed above are always correct.

Answer 1

Here, coupon rate is less than the required rate, so the bond will trade at discount. So bond price will be less than 1000

Answer : b : less than $1000 (Thumbs up please)