If john bought a bond for 1000.00 for 10 yrs, at 10% , then wanted to sell it one year later. The market value is now at 8%. How mcuh is his worth? Please show me how your work?

Question

If john bought a bond for 1000.00 for 10 yrs, at 10% , then wanted to sell it one year later.  The market value is now at 8%.  How mcuh is his worth?  Please show me how your work?

anonymous · Answer

Hey Mck, I think that you should give google a shot with some of your bond pricing problems. I'm not sure if your professor/teacher has you calculate this with a calculator or by hand, but if it is by hand this link will help you solve this problem: http://www.moneyinstructor.com/art/bondvaluation.asp It's a very detailed site that helped me when I was in finance. For this problem you can plug it into a basic finance calculator like the BA-II plus and it will solve it for you.

llort · Answer

Is the 10% compounded?

anonymous · Answer

if the yield is now later, it means the price went up

anonymous · Answer

compounded is not the issue, its whether its a semi-annual (the norm) or annual coupon. This can be easily plugged into a financial calculator like Oreostar such as http://www.arachnoid.com/lutusp/finance.html Annual: 1,124.94 Semi-Annual: 1,126.59