A 20-year bond pays 9% on a face value of $1,000. If similar bonds are currently...
A 20-year bond pays 9% on a face value of $1,000. If similar bonds are currently yielding 6%, what is the market value of the bond? Use annual analysis. Use time value of money tables in Appendix B and Appendix D.
Multiple Choice
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Under $1,300
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Exactly $1,000
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Over $1,300
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Not enough information is given to tell.
Homework Answers
Using a BA 2 plus calculator to calculate the market value of bond-
FV= $1000
I/Y = 6%
PMT(Coupon payment) = $90
N=20
CMPT PV
Market Value = $1344.09
Hence, Option C is the answer.
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