A bond has the following terms: Principle amount: $1,000 Annual interest paid $1

Question

A bond has the following terms: Principle amount: $1,000 Annual interest paid $100 Maturity 10 Years
1, What is the bond's price if comparabledebtyields 12%? 2, What would be the price if comparable debt yields 12% and the bond matures after 5 years? 3, What would be the bond's price in Question #1 if interest rates declined to 9%?
The questions originated from the textbook- Introduction to Investments (10th edition) from theauthor: Herbert B. Mayo.
Pls show the work of calculation also. Thank you! A bond has the following terms: Principle amount: $1,000 Annual interest paid $100 Maturity 10 Years
1, What is the bond's price if comparabledebtyields 12%? 2, What would be the price if comparable debt yields 12% and the bond matures after 5 years? 3, What would be the bond's price in Question #1 if interest rates declined to 9%?
The questions originated from the textbook- Introduction to Investments (10th edition) from theauthor: Herbert B. Mayo.
Pls show the work of calculation also. Thank you!

Explanation / Answer

1, the bond's price if comparabledebtyields 12% will be $886.99 2, the price if comparable debt yields 12% and the bond matures after 5 years would be $927.91 3, the bond's price in Question #1 if interest rates declined to 9% would be $1,064.18

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