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Homework answers / question archive / Dmytriw buys a bond with 25 years until maturity

Dmytriw buys a bond with 25 years until maturity. The face value is $1000 and the coupon rate is 4%. a) If the current interest rate is 8.35% compounded 4 times per year, what is the price of the bond? b) If Dmytriw insists on earning at least 9.75%, what price should he be willing to pay for the bond? c) If Tanya pays $10 more than what Dmytriw paid in part b), what interest rate is she earning on her investment?

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