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 ?© BrainMass Inc. brainmass.com March 4, 2021, 5:40 pm ad1c9bdddf
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 ...
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.