A 20-year bond pays 6% on a face value of $1,000. If similar bonds are currently yielding 5%, what is the market value of the bond? Use annual analysis.
A) Over $1,100
B) Under $1,000
C) Under $900
D) Not enough information given to tell

Question

Quizplus · Accepted Answer

The bond pays a higher interest rate (6%) than the current market yield (5%), making it more valuable. Therefore, its market value will be over $1,000, likely over $1,100.

A 20-Year Bond Pays 6% on a Face Value of $1,000