What is the rate of return you should receive

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Reference no: EM131986851

At the beginning of the year, you bought a regular bond with following information:

Face value: 10,000

Coupon rate: 6.25%

Coupon payment is made at the end of each year

Interest rate (or require rate of return): 5%

Maturity: 35 years

a. What should be the fair value/price of the bond?

Report the answer with 2 numbers after decimal place

b. If the market price for this bond is 8,990 and you decided to pay that price to own the bond and hold it till maturity, what is the rate of return you should receive?

Report the answer in percentage term with 2 numbers after decimal place such as 12.43%.

Reference no: EM131986851

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