Question
You purchased one XYZ bond six years ago in the marketplace for $1,250. The bond's coupon rate is 7%. The bond matures 18 years from
You purchased one XYZ bond six years ago in the marketplace for $1,250.
The bond's coupon rate is 7%.
The bond matures 18 years from now.
New bonds, similar in risk and quality to the XYZ bond that you currently own, are being
issued in the market with a coupon rate of 8%.
Calculate the price that a bond investor would be willing to pay to purchase your bond
today.
Assume that interest payments from the bond are received twice per year.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
