Rate is consistent with the market rates

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Reference no: EM131014087

Suppose you buy a 20-year bond with face value of $1000 which pays annual coupons with a coupon rate of R=5% . Let's say that that rate is consistent with the market rates, so you pay $1000 ('par').

After 5 years, right after the 5th coupon has been paid, with 15 years still on that bond, you decide to sell. Rates for comparable bonds are now at 4%. What price will you get for your bond?

Reference no: EM131014087

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