A 20-year bond pays 6% on a face value of $1,000. If similar bonds are currently yielding 5%, what is the market value of the bond? Use annual analysis.
A)Over $1,100
B)Under $1,000
C)Under $900
D)Not enough information is given to tell.

Question

Quizplus · Accepted Answer

The bond pays a higher interest rate (6%) than the current market yield (5%), making it more valuable. The bond's market value will be over its face value of $1,000, hence over $1,100.

A 20-Year Bond Pays 6% on a Face Value of $1,000