A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of...

A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of 14 years. The current market yield is 10%. Face value is $1,000. If market conditions remain unchanged, what should the price of the bond be in 1 year? Assume the market yield remains unchanged.

B) A bond currently trades at a price of $852.72 in the market. The bond offers a coupon rate of 7%, paid annually, and has a maturity of 15 years. Face value is $1,000. What is the bond's Current Yield?

Expert Solution

A). After one year, the number of periods to maturity will be 13 years. The price of Bond is calculated in excel below using PV function:

jeff jeffy answered 1 year ago

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