Return on Bonds.

Return on Bonds.

Timothy has an opportunity to buy a $1,000 par value municipal bond with a coupon rate of 7% and a maturity of five years. The bond pays interest annually. If Timothy requires a return of 8%, what should he pay for the bond?
2. Bond Valuation. Mia wants to invest in Treasury bonds that have a par value of $20,000 and a coupon rate of 4.5%. The bonds have a 10-year maturity, and Mia requires a 6% return. How much should Mia pay for her bonds, assuming interest is paid annually?

READ ALSO :   Marketing Myopia