Bond Pricing

However, if a new bond is being issued with coupon rate of 15% in the 15% interest rate environment, the bond would be valued at $1,000. To see the opposite effect, if interest rates fall to 5%, the original bond that was issued under the 10% interest rate market would sell at. Value of the bond = [100/1.05] + [(1,000+100)/(1.05)2] = $1,092.97 ... ................
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