If a bond was to pay off one year from now for $321 and the interest rate is 7 percent, what is the price of the bond?

Question

Quizplus · Accepted Answer

We can use the formula:
Price of Bond = Payment / (1 + Interest Rate)^Time
where Time is in years.
Substituting the values, we get:
Price of Bond = 321 / (1 + 0.07)^1
Price of Bond = 321 / 1.07
Price of Bond = 300
Therefore, the price of the bond is $300. The correct choice is C.

If a Bond Was to Pay Off One Year from Now