Suppose you bought a Terrapin Aluminum Company bond two years ago. At the time, the semiannual...

 

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Suppose you bought a Terrapin Aluminum Company bond two years ago. At the time, the semiannual bond had 10-years to maturity, $1000 par value, with a coupon rate of 2%. Two years ago when you bought the bond, the market interest rates were 1%. You still own the bond today but interest rates have increased to 3%. When you purchased the bond two years ago, what was its price, and what is the new price of the bond today? The price at purchase was $1180.46; the current price of the bond is $1000. The price at purchase was $1048.65; the current price of the bond is $1039.11. The price at purchase was $1000.00; the current price of the bond is $1076.70. The price at purchase was $1094.71; the current price of the bond is $1076.52. The price at purchase was $1094.94; the current price of the bond is $929.34. Suppose you bought a Terrapin Aluminum Company bond two years ago. At the time, the semiannual bond had 10-years to maturity, $1000 par value, with a coupon rate of 2%. Two years ago when you bought the bond, the market interest rates were 1%. You still own the bond today but interest rates have increased to 3%. When you purchased the bond two years ago, what was its price, and what is the new price of the bond today? The price at purchase was $1180.46; the current price of the bond is $1000. The price at purchase was $1048.65; the current price of the bond is $1039.11. The price at purchase was $1000.00; the current price of the bond is $1076.70. The price at purchase was $1094.71; the current price of the bond is $1076.52. The price at purchase was $1094.94; the current price of the bond is $929.34.

Answer rating: 100% (QA)

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