Explore BrainMass
Share

Explore BrainMass

    Bond valuation of a broker

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

    Broker quotes bond at $1180, $1000 par value bond pays 14 percent interest, has 25 years until maturity. Current yield to maturity is 12 percent. Compute new price of bond, is it overpaid in marketplace?

    © BrainMass Inc. brainmass.com October 10, 2019, 1:39 am ad1c9bdddf
    https://brainmass.com/economics/finance/bond-valuation-broker-343765

    Solution Preview

    The price of the bond should be the present value of interest and the principal. The annual interest is $140 and is an annuity and so we ...

    Solution Summary

    The solution explains how to determine the price of a bond.

    $2.19