Homework Question Help (Finance)

label Business & Finance
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schedule 1 Day
account_balance_wallet $5

Apple just issued a bond with a $10,000 face value and a coupon rate of 7%. If a bond has a life of 30 years, pays semi-annual coupons, and the yield to maturity is 9%. What will the bond sell for?

Jul 8th, 2015

Thank you for the opportunity to help you with your question!

The value, or price, of a bond changes inversely with the direction of interest rates. At the stated coupon rate of 7.000% the bond you described is worth $10,000.00, same as the face amount. However, calculated at the current market rate of 0.000% your bond would be valued at $31,000.00, and at your desired yield of 9.000% your bond would be valued at $7,936.20. 




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Jul 8th, 2015

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