If you bought a 10-year bond issued by Delta, with a par value of $1,000 and...

If you bought a 10-year bond issued by Delta, with a par value of $1,000 and a coupon interest rate of 6%. At maturity you will receive

A. $60.
B. $600.
C. $1,000.
D. $1,600.
E. More information would be required to answer the question.

Solutions

Expert Solution

Data given:

Par value = $ 1000
Coupen interest rate = 6 %
Time = 10 years

Calculation: Bond price at maturity of 10 years = Par value × (1 + coupen interest rate × time in years)

= 1000(1 + 6/100 × 10)
= 1000(106/100 × 10)
= 1000(10.6)
= $ 1600

Hence, option (D) $ 1600 is correct.

Rahul Sunny answered 1 year ago

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