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# Bond Prices

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You own a 20-year, \$10,000 par value bond paying 7% interest annually. The market price of the bond is \$875, and your required rate of return is 10%.

A) Compute the bond's expected rate of return
B) Determine the value of the bond to you, given your required rate of return
C) Should you sell the bond or continue to own it?

https://brainmass.com/economics/finance/calculating-bond-prices-239308

#### Solution Preview

Problem: You own a 20-year, \$10,000 par value bond paying 7% interest annually. The market price of the bond is \$875, and your required rate of return is 10%.

Solution:
A) Compute the bond's expected rate of return

You can use a financial calculator or Excel to solve this part. Since ...

#### Solution Summary

This posting helps with a problem that involves calculating bond prices. Overall, an excellent response with a great amount of detail. The solution is very easy to understand and very well explained. Step by step instructions are given to solve similar problems. Thus, a student can easily apply what he learns in this posting to other questions.

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