# What is the bond's price if comparable debt yields 12%? What is the current yields and yields to maturity?

1. A bond has the following terms:

Principal amount $1,000

Semi-annual interest $50

Maturity 10 years

A. What is the bond's price if comparable debt yields 12%?

B. What is the current yields and yields to maturity?

C. What would be the bond's price if interest rates declined to 8%

D. What two generalizations may be drawn from the above price changes? In other words,

Explain the relationship in the above example between interest rates (at 12% vs 8%)

And the price of the bond.

https://brainmass.com/business/finance/bonds-price-comparable-debt-yields-54228

#### Solution Preview

1. A bond has the following terms:

Principal amount $1,000

Semi-annual interest $50

Maturity 10 years

A. What is the bond's price if comparable debt yields 12%?

FV = 1000

Payment per period = 50

Number of periods = 10*2 = 20

Return rate = 12%

Then use a financial calculator or EXCEL "=PV" commend, we can compute

Present value = 477.14, which is the bond's ...

#### Solution Summary

The expert determines bond prices if comparable debt yields.