Question

On January 1, 2015, silver penny corporation issued a standard bond with a 1000$ par value, a 30-years maturity, and an annual coupon rate of 8% with quarterly coupon payment. Assume that over the next 5 years, interest rates go up and yield to maturity for this bond on January 1, 2020 is 10%.

A) what is the value of the bonds on 01/01/2020?
B) Given this value, what is the current bond yield?
C) Is this a premium bond or a discount bond? Why?

Answer 1

Did you mean: On January 1, 2015, silver penny corporation issued a standard bond with a 1000$ par value, a 30-years maturity, and an annual coupon rate of 8% with quarterly coupon payments. Assumes that over the next 5 years, interest rates go up and yield to maturity for this bond on January 1, 2020 is 10%. A) what is the value of the bonds on 01/01/2020? B) Given this value, what is the current bond yield? C) Is