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Market Value of Bonds

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You own a bond that you bought two years ago. It was originally a $1000 par value, 10 year bond paying interest annually with a 5% coupon. Due to actions of the Fed over the last couple of years, interest rates have dropped, and rates on comparable debt now are 4%. Find the current market value of your bond.

Remember that you already held the bond for two years.

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The solution is very easy to understand and concise. It is an excellent response for students who want to understand the concepts and then use the same concepts to solve similar problems in the future. Overall, an excellent response. The solution provides the necessary steps which are easy to follow.

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