What is the current market value of the bond

Reference no: EM13208779

suppose you purchase a corporate bond with a 0-year maturity, a $1000 par value, a 10% coupon rate, and semiannual interest payments. This means that you receive a $50 interest payment at the end of each six-month period for 10 years (20 times). Then, when the bond matures, you will receive the principle amount (the face value) in a lump sum. three years after the bonds were purchased, the going rate of interest on new bonds fell 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (three years after its purchase) ?

Reference no: EM13208779

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