To determine the approximate dollar price for which you could sell your bond, you would need to calculate its current market value. The market value of a bond is determined by discounting the future cash flows (i.e. the coupon payments and the final principal payment) at the prevailing market interest rate.
The bond you purchased in 2009 has a par value of $1,000 and an interest rate of 10.25 percent. This means that it pays a coupon of $102.50 per year ($1,000 x 10.25%), which is paid semi-annually in two equal installments of $51.25 each. The bond has a maturity of 10 years, which means that it will pay back the par value of $1,000 at the end of the 10-year period.
To calculate the market value of the bond, we need to discount each of these cash flows at the current market interest rate of 7.75 percent. We will assume that the next coupon payment is due in six months from now.
The present value of the six-month coupon payment of $51.25 is:
PV(Coupon) = $51.25 / (1 + 7.75%/2)^1 = $49.92
The present value of the second six-month coupon payment of $51.25 is:
PV(Coupon) = $51.25 / (1 + 7.75%/2)^2 = $48.63
The present value of the remaining eight semi-annual coupon payments is:
PV(Coupons) = $51.25 * [(1 - 1/(1 + 7.75%/2)^16) / (7.75%/2)] = $685.69
The present value of the principal payment of $1,000 at the end of 10 years is:
PV(Principal) = $1,000 / (1 + 7.75%/2)^20 = $476.28
The market value of the bond is the sum of the present values of all the cash flows:
Market Value = PV(Coupon) + PV(Coupon) + PV(Coupons) + PV(Principal)
= $49.92 + $48.63 + $685.69 + $476.28
= $1,260.52
Therefore, the approximate dollar price for which you could sell your bond today is $1,260.52.