A corporate bond has a $10,000 face value and offers a 7% coupon rate. The bond matures at the end of three years.
a. If the interest rate is 7%, what is the present discounted value of the bond?
b. If the interest rate is 5%, what is the present discounted value of the bond?
c. Suppose the bond is selling for $9,800. Show how you would solve for the bond's yield to maturity.

Question

Quizplus · Accepted Answer

The Answer of A corporate bond has a $10,000 face value and offers a 7% coupon rate. The bond matures at the end of three years.
a. If the interest rate is 7%, what is the present discounted value of the bond?
b. If the interest rate is 5%, what is the present discounted value of the bond?
c. Suppose the bond is selling for $9,800. Show how you would solve for the bond's yield to maturity.

A Corporate Bond Has a $10,000 Face Value and Offers