msid Posts: 1, Reputation: 1 New Member #1 Apr 25, 2007, 01:30 PM
Bond Prices
If the interest rate in market declines from 11% to 8%, What is the bond price at 11% and at 8%? What would be the percentage of return if you sell it at 8%, but you had bough tit at 11%?
 Dr D Posts: 698, Reputation: 127 Senior Member #2 Apr 25, 2007, 03:59 PM
Your question is a bit confusing, so I will do the best that I can, without doing your homework. Let's soppose that you buy a \$1000 bond with a simple yield of 11% per year. How much \$ would this bond earn inthat year? Hint: take 11% of \$1000. Now let'say that market rates drop to 8% and you have a bond paying 11%. Will the value of the bond go up or down? To determine the present value of this bond you take the yearly cash earned and divide it by the current market rate, and that will give you the present market value of your \$1000 bond. Let me know what answer you came up with.

 Question Tools Search this Question Search this Question: Advanced Search

## Check out some similar questions!

Amide bond (peptide bond) [ 3 Answers ]

hello ever1 I don't know much about chemistry, so hlp me with this is amide bond (peptide bond), balanced chemical equation?

Increasing prices [ 5 Answers ]

I need to write a letter that talks about a price increase. Anyone got any suggestions for wording?:)

Bond prices and yields [ 2 Answers ]

This is the only question I need help with: a. Several years ago, Castles in the Sand Inc. issued bonds at a face value at a yield to maturity of 7 percent. Now, with 8 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has...

Different prices for 14-2 NM [ 3 Answers ]

So I can get 14-2 NM w ground at the big store off the spool for something like \$0.43/lin ft w/out tax. I can buy 250 ft of 14-2 NM-B w ground prepakaged on the shelf behind me for something like just under \$60, tax not included... compared to \$107.5 at the spool price. Don't know the grade of...

Motherboard prices [ 1 Answers ]

Anyone can suggest a good motherboard.. like good quality and reasonable price? Somebody told me is around C\$500. Is it true? What if a certain component in the motherboard is not functioning well, is it necessary to change the motherboard? Ty in advance.