You are considering purchasing a corporate bond that has an expected rate of return of 10%,...
You are considering purchasing a corporate bond that has an expected rate of return of 10%, 5% coupon paid annually, a 1,000 par value, and has 3 years to maturity. Based on your projections, you will be able to sell the bond at the end of year 3 for 1,100. Calculate current market price of the bond.
Homework Answers
Hello,
As per the question details given in the question
I/Y= 10%
PMT i.e Coupon amount =50 (5% of 1000)
N=3
FV= 1100
CPT- PV= -950.7889
Market price of the bond = 950.7889
I hope this clear your doubt.
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