Price of a bond
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You just purchased a 15-year bond with an 11 percent annual coupon. The bond has a face value of $1,000 and a current yield of 10 percent. Assuming that the yield to maturity of 9.7072 percent remains constant, what will be the price of the bond 1 year from now?
$1,000
$1,064
$1,097
$1,100
$1,150
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Solution Summary
The solution explains how to calculate the price of a bond 1 year from now.
Solution Preview
Given that the YTM remains constant the bond would earn the investor a return of 9.7072% during one year. The current yield is 10%. ...
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