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    Market price of bond

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    A company's $500 million of 30-year bonds outstanding was issued at a coupon rate of 8%. On 5/1/03, two years after issuance, the market rate for bonds of similar characteristics falls to 5%. What should be the market price of the company's bonds on the bond market at 5/1/03?

    a. 66.85
    b. 100
    c. 144.69
    d. 146.12

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    Solution Preview

    The market price would be the present value of interest and principal. ...

    Solution Summary

    The solution explains how to calculate the market price of bond.