Ten years ago,your grandparents gifted you a 20-year,$1,000 bond.The interest rate at the time of purchase was 5%.Today,comparable bonds are paying 7%.Approximately how much could you sell this bond for?

Question

Quizplus · Accepted Answer

The bond's price decreases when interest rates rise. The bond's present value is calculated using the new interest rate of 7%, which results in a lower price than its face value.

Ten Years Ago,your Grandparents Gifted You a 20-Year,$1,000 Bond