Explore BrainMass
Share

Explore BrainMass

    Bond price

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Suppose a $1,000 par-value bond was issued last year with a promised annual rate of return (yield) of 6 percent when market interest rates on comparable securities were also 6 percent. Thus, the bond pays its holder $60 annually in interest. Today, one year later, market interest rates on comparable securities are 10 percent. The price of the 6 percent bond will approach what dollar figure?

    © BrainMass Inc. brainmass.com October 9, 2019, 11:12 pm ad1c9bdddf
    https://brainmass.com/economics/banking/bond-price-values-248192

    Solution Summary

    Bond price is determined.

    $2.19