What is the price of a 40 year 4% bond? Suppose similar bonds have a yield...

What is the price of a 40 year 4% bond? Suppose similar bonds have a yield to maturity of 5%

Expert Solution

Computation Of Bond Price

a	Annual Coupon Amount	$ 40.00

b	Present Value Annuity Factor for (40 Years,5%)	17.159086
c	Present Value Of Annual Interest (a*b)	$ 686.36
d	Redemption Value	$ 1,000.00
e	Present Value Of (40 Years,5%)	0.14205
g	Present Value Of Redemption Amount (d*e)	$ 142.05
f	Bond Price(c+g)	$ 828.41

jeff jeffy answered 3 years ago

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What is the price of a 40 year 4% bond? Suppose similar bonds have a yield...

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