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You own a bond that pays $100 in interest annually, has a par value of $1000, and matures in 15 years. What is the value of the bond if your required rate of return is 12%? What is the value of the bond if your required rate of return (a)
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increases to 15% or (b) decreases to 8%? Now, recomputed all three answers
assuming that the bond matures in 5 years instead of 15 years.

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chilljain33
  1. If the required rate of return is 12%, then the value of the bond will be $834;
  2. If the required rate of return is 15%, then the value of the bond will be $667;
  3. If the required rate of return is 8%, then the value of the bond will be $1250;

When maturity of the bond is in 5 years, then at different required rate of returns, the value of the bond will be,

  1. At 12%- $312.50
  2. At 15%- $285.71
  3. At 8%- $357.14

What is required rate of return?

The rate of interest, which is expected to be earned by an individual upon engaging or investing the given amount of money during a particular financial period, is known as a required rate of return.

Hence, the different values of bond at given required rates of return are aforementioned.

Learn more about required rate of return here:

https://brainly.com/question/13987385

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