You purchase a 7% annual coupon bond for $871.65 today. You then sell the bond after...
You purchase a 7% annual coupon bond for $871.65 today. You then
sell the bond after
holding it for one year and earn a 9% return on your investment.
What is the price for
which you would have sold the bond?
Homework Answers
F = P *(1+i)^t
i = 9% = 0.09
t = 1 yr
P = 871.65
Sale value of bond = 871.65 * (1+0.09) = 871.65 * 1.09 = 950.0985 ~ 950.10
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