Question:A corporate bond has a $1,000 face value and a 5 percent
coupon rate (annual payments)...
Question
A corporate bond has a $1,000 face value and a 5 percent
coupon rate (annual payments)...
A corporate bond has a $1,000 face value and a 5 percent
coupon rate (annual payments) maturing in 3 years.
a. If the yield to maturity is 7%, what is the bond
price?
b. An investor believes an appropriate rate to discount the
future cash flow of the bond should be 6%, should the investor buy
or sell the bond? Discuss the reason(s).