Value of a bond
Not what you're looking for?
You purchased a $1,000 five percent coupon bond that matures in 10 years.
How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that point?
Purchase this Solution
Solution Summary
The solution explains how to calculate the value of a bond given change in interest rates
Solution Preview
The price of a bond is the present value of interest and principal discounted at the market rate. For the given bond, the annual interest is 1,000X5%=$50, the years to maturity are 10, principal amount is $1,000 and the discounting rate is the market rate which is 4%.
In order to calculate the ...
Purchase this Solution
Free BrainMass Quizzes
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.