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Suppose you bought a bond that will pay $1,000 in 20 years. No intermediate coupon payments will be made. If the appropriate interest rate is 8%. What is current price? Price 10 years from now? 15 years?

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Suppose you bought a bond that will pay $1,000 in 20 years. No intermediate coupon payments will be made. If the appropriate interest rate is 8%.

a. What is the current price of the bond?
b. What will the price be 10 years from today?
c. What will the price be 15 years from today?

Assume the interest rate does not change.

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Solution Summary

The expert determines the current price of a bond for appropriate interest rates.

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