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Calculate the excess of the book value over the second sale

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Question - A $1000 bond with annual coupons at 8 1 2% and maturing in 20 years at par is purchased to yield an annual effective rate of interest of 9% if held to maturity. The book value of the bond at any time is the discounted value of all remaining payments, using the 9% rate. Ten years later, just after a coupon payment, bond is sold to yield the new purchaser a 10% annual effective rate of interest if held to maturity. Calculate the excess of the book value over the second sale price.

Reference no: EM133053940

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