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How much would you pay for the bond

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Reference no: EM133123721

XYZ Inc. issued a 10-year bond with a par value of $1,000 and a coupon rate of 8%.

The bond was issued 4 year ago.

Every year, bond holders receive $40.00 on June 30 and December 31.

Your yield is 10%.

Required:

  1. How much would you pay for the bond on Day 1 of Year 5?
  2. How much would you pay for the bond on Day 1 of Year 5 if your yield were 6%?
  3. Under what circumstance, if any, would you agree to pay $1,000 for the bond? Why? 

Reference no: EM133123721

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