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Sam wants to purchase a bond that has a par (face) value of $1000, an annual...

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Finance

Sam wants to purchase a bond that has a par (face) value of$1000, an annual coupon rate of 7%, and a maturity of 10 years.Sam's annual required rate of return is 11%. What should Sam bewilling to pay for this bond?

760.99

1000

2100.00

764.43

Answer & Explanation Solved by verified expert
3.5 Ratings (384 Votes)
Price of a bond is the present value of all future cash flows receivable from the bond discounted at required rate of return Future cash flows are periodic interest payments and maturity    See Answer
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Transcribed Image Text

Sam wants to purchase a bond that has a par (face) value of$1000, an annual coupon rate of 7%, and a maturity of 10 years.Sam's annual required rate of return is 11%. What should Sam bewilling to pay for this bond?760.9910002100.00764.43

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