A $1000 face value, 10% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually.
-What would be the new price of the bond if the required return abruptly rises to 10%?

Question

Quizplus · Accepted Answer

When the required return equals the coupon rate (both 10%), the bond will be priced at its face value, which is $1000.

A $1000 Face Value, 10% Bond (Interest Payable Semiannually) Has