Joseph's Company has just issued a 20-year, 9 percent coupon rate, $1,000-par bond that pays interest semiannually....

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Finance

Joseph's Company has just issued a20-year, 9 percent coupon rate, $1,000-par bond that pays interestsemiannually. Two years later, if the going rateof interest on the bond falls to 8 percent, what is the value ofthe bond?
           a.         $1,225.62
           b.         $1,135.90
           c.         $1,094.54
           d.         $1,116.52
           e.         $1,012.38

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4.2 Ratings (577 Votes)

Current Value of the Bond The Current Value of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 See Answer

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Joseph's Company has just issued a20-year, 9 percent coupon rate, $1,000-par bond that pays interestsemiannually. Two years later, if the going rateof interest on the bond falls to 8 percent, what is the value ofthe bond? a. $1,225.62 b. $1,135.90 c. $1,094.54 d. $1,116.52 e. $1,012.38