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An investor just purchased a 5-year $1,000 par value bond. The coupon rate on this bond...

An investor just purchased a 5-year $1,000 par value bond. The coupon rate on this bond is 10% annually, with interest paid every year. If the investor expects to earn 12% simple rate of return, how much the investor should pay for it?

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Expert Solution

Solution :

The amount payable by the investor for the bond = $ 927.90

= $ 928 ( If rounded off to the nearest whole number )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 2 months ago
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