A 25-year, $1,000 par value bond has an 8.5% annual coupon. The bond currently sells for $875. If the yield to maturity remains at its current rate, what will the price be 5 years from now?
We first find the current YTM. YTM is the discounting rate that will make the present value of ...
The solution explains how to calculate the bond value in 5 years.