# What is the market price of a bond with 10% coupon, 8 year maturity, yield 12%

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A $1,000 par bond having a 10% coupon rate and 8 years until maturity is selling to yield 12%. Interest is paid annually. Approximately what is the market price for this bond ?

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The solution shows all the calculations necessary to arrive at the answer, plus there is sufficient narrative statements for a full understanding of the problem.

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The attached Excel spreadsheet provides the solution. Note, since the interest rate is higher than the coupon paid by the bond, the bond will always sell at a ...

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