A corporate bond, paying $65 interest at the end of each year for 6 years, has a face value of $1,000. If market rates on newly issued similarly rated corporate bonds are now 7.5%, what is the current market price of this bond?

Question

Quizplus · Accepted Answer

The current market price of the bond is calculated by discounting the future cash flows (interest payments and face value) at the market rate of 7.5%. The present value of the interest payments and the face value sums up to $953.06.

A Corporate Bond, Paying $65 Interest at the End of Each