Contemporary Engineering Economics 6th Edition by Chan Park

تمرين 32

Suppose you purchased a corporate bond with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments. This means that you receive a $50 interest payment at the end of each six-month period for 10 years (20 times). Then, when the bond matures, you will receive the principal amount (the face value) in a lump sum. Three years after the bonds were purchased, the going rate of interest on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value ( P ) of the bond (three years after its purchase)