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Market price of bond

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

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.

$2.19