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# Compound interest rate

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At a compound interest rate of 10% per year, \$10,000 one year ago is equivalent to how much 1 year from now?

https://brainmass.com/economics/finance/compound-interest-rate-50438

#### Solution Summary

Compound interest rate is studied and the details are provided in the solution.

\$2.19
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## Semiannual Compounding on Bond, Coupon Bond, Rate, Interest, Yield, change

See attached file.

Use semiannual compounding on all bond problems unless otherwise indicated.

1. Determine the price of a \$1,000 6% coupon rate bond that pays interest semiannually and has 5 years before maturity when similar securities have yields of 5%.

2. How much money will you be willing to pay for a 3 year \$1,000 4% coupon bond that pays interest semiannually when similar securities have yields of 6%?

3. What is the current yield of the bond in question #2?

4. Would you pay 970 for a \$1,000 deep discount bond that has 7 years remaining before maturity when similar securities had yields of 6%? Use semiannual compounding of interest rates. Use a coupon rate of 5%

5. What is the yield to maturity on a \$1,000 5% coupon bond that pays interest semiannually, has 3 years before maturity and is currently trading at 96?

6. What is the coupon yield on the bond in question #5? What is the current yield on the bond in question #5?

7. If the yield to maturity on a bond decreases, will the price of the bond change? If yes, how will the price of a bond change.

8. List at least three factors that can cause interest rates to change.

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