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Posted on May 20, 2024

You want to buy a $2000 corporate bond maturing in 3 years with a coupon rate of 9%. The current market rate is of 7%.

You want to buy a $2000 corporate bond maturing in 3 years with a coupon rate of 9%. The current market rate is of 7%. Answer the following questions:

1) How much is the bond going to cost you today?

2) Will the coupon rate change if the market rate rises to 8%?

3) What will the price be of the bond if market rate is 6%?

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