What is the price of the bond if market interest rates are 4 percent?
A)$105,816.44.
B)$105,287.67.
C)$105,242.14.
D)$100,000.00.

Question

Quizplus · Accepted Answer

100,000 face value, 5% annual coupon, 6 year maturity, 4% rate 11efb86b_f41f_a2a0_9137_e5799852a721_TB1314_00 The price of a bond is calculated based on the present value of its future cash flows, discounted at the market interest rate. Given the options, $105,242.14 is the closest to the calculated present value when the market interest rate is 4 percent.

What Is the Price of the Bond If Market Interest