If investors require a 2.9 percent return on a 30-year discount bond with a $10000 face...

If investors require a 2.9 percent return on a 30-year discount bond with a $10000 face (par) value, what is the price that they are willing to pay? State the answer as a number with 2 decimals without $ sign.

Solutions

Expert Solution

Price of a discount bond = Face Value/((1+required return)^years to maturity)

= $10,000/((1+2.9%)^30)

= $4,241.69

$4,241.69 is the price that the investor will be willing to pay.

jeff jeffy answered 1 year ago

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