Mr. Smith wishes to sell a bond that has a face value of $1,000. The bond bears

Question:

Mr. Smith wishes to sell a bond that has a face value of $1,000. The bond bears an interest rate (coupon rate) of 7.5%, with bond interest payable semiannually. Four years ago, the bond was purchased at $900. At least a 9% annual return
(APR) on the investment is desired. What must be the minimum selling price now for the bond in order for Mr. Smith to make the desired return on the investment after making eight interest payments?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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