Question

A bond that matures in 9 years has a par value of $1.000 and an annual coupon payment of $65; its marked interest rate is 89% What is its mice?

a) None of these are correct
b) 385
c) 1000
d) 1035.80
e) 90630

Answer 1

The bond's price can be calculated using the formula for the present value of a bond. The present value can be found by discounting the annual coupon payments and the par value at the market interest rate. The bond's price turns out to be $1,035.80.

Step-by-step explanation:

The bond's price can be calculated using the formula for the present value of a bond. The present value can be found by discounting the annual coupon payments and the par value at the market interest rate.

In this case, the bond has a 9-year maturity and a par value of $1,000 with an annual coupon payment of $65. The market interest rate is 8%. To calculate the bond's price, we can use a financial calculator or a spreadsheet to find the present value of the cash flows.

The bond's price turns out to be $1,035.80, so the correct answer is d) 1035.80.