Purchase Solution

Determining the Market Value of A Bond

Not what you're looking for?

Ask Custom Question

A ten percent coupon rate bond pays interest semi-annually. Par value is $1,000. It has three years to maturity. Investors' required rate of return is 12 percent. What is the present value of the bond?

Purchase this Solution

Solution Summary

This solution illustrates how to determine the market value of a bond when the going market rate differs from its coupon rate.

Solution Preview

You can find this answer in either of two ways. I am going to break it down for you to the easier, but longer, way. A coupon bond is really an annuity of interest payments (in this case, $50 twice per year for 3 years) and a lump-sum par value ...

Purchase this Solution


Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Introduction to Finance

This quiz test introductory finance topics.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Learning Lean

This quiz will help you understand the basic concepts of Lean.