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Bond Prices

Table 10-1 Bond Price Table
10% interest payment, 20 years to maturity

Yield to Maturity/Bond Price

2% 2,308.10
4% 1815.00
6% 1459.00
7% 1317.40
8% 1196.80
9% 1090.90
10% 1000.00
11% 920.30
12% 850.90
13% 89.50
14% 35.30
16% 43.90
20% 13.00
25% 407.40

Go to table 10-1 which is based on bonds paying 10% interest for 20 years. Assume interst rates in the market (yield to maturity) decline from 11% to 8%.

a. What is the bond price at 11%?
b. What is the bond price at 8%?
c. What would be your return on investment if you bought when rates were 11% and sold when rates were 8%?

Solution Preview

Please see the attached file
Table 10-1 Bond Price Table
10% interest payment, 20 years to maturity

Yield to Maturity/Bond ...

Solution Summary

Finds bond prices at different YTMs and return on investment on purchase of bonds.

$2.19