View the step-by-step solution to:

would i go about calculating the market price of a 5 year bond with a face value of $1000 and a 4% coupon rate if the market interest rate is also 4%?...

Assistance needed urgently


How would i go about calculating the market price of a 5 year bond with a face value of $1000 and a 4% coupon rate if the market interest rate is also 4%?

And what If I decided that the market rate increase to 5%, what is the new market price of the bond?

And last but not least If the market rate drops to 3%, what is the new market price of the bond?

Top Answer

The market price of a 5 year bond is $1000 The... View the full answer

2 comments
  • only thing i believe last one might just be 1046.11 instead of $1045.80. Thanks for the assistance though! Appreciated
    • lisamcharles
    • May 13, 2018 at 3:48pm
  • You are most welcome. Note: If the bond pays coupon semi-annually, then 1045.11 is correct.
    • bfacenjoro
    • May 13, 2018 at 4:00pm

Sign up to view the full answer

Other Answers

Market Price of a 5 Year bond = $1000 New... View the full answer

bond.png

Bond Price is Calculated by Formula :-
C ' [1- I 1+r] “-n If r +Faee VAIueI [ 1+r]“ n C : Coupon 0.04‘1000 $40 I : rate of Return 0.04 n: Years a At Market Rate 4% Bond Price = 340‘ [ 17 [...

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online