How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Manal Elkhoshkhany Your Own Question
Manal Elkhoshkhany
Manal Elkhoshkhany, Tutor
Category: Finance
Satisfied Customers: 9776
Experience:  More than 5000 online tutoring sessions.
3708793
Type Your Finance Question Here...
Manal Elkhoshkhany is online now
A new question is answered every 9 seconds

A $1000 par value bond was issued 25 yrs ago at a 7% coupon

Customer Question

A $1000 par value bond was issued 25 yrs ago at a 7% coupon rate. It currently has 10 yrs remaining to maturity. Interest rates on similar debt obligations are now 12%.
a. Compute the current price of the bond using an assumption of semi-annual payments.
b. If Mr. Robinson initially bought the bond at par value, what is his percentage loss (or gain)?
c. now asume Mrs. Pinson buys the bond at its current market value and holds it to maturity, what will her percentage return be?
d. Although the same dollar amounts are involved in part b and c, explain why the percentage gain is larger than the percentage loss.
Submitted: 7 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 7 years ago.

HelloCustomer/p>

 

I had answered the question incorrectly, but since you have not checked the solution, I am removing the solution. If you still need help with this question, please advise me and I will post the correct answer.

 

P.S. Please do not click accept so that you do not get charged

 

Regards,