Answer:
Bond value $895.6777
Explanation:
The price of the bond in the market will be equivalent to the presetn value of the future coupon payment and maturity discounted at the market rate. Which in this case, is 14%
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 120.00
time 10
rate 0.14
[tex]120 \times \frac{1-(1+0.14)^{-10} }{0.14} = PV\\[/tex]
PV $625.9339
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 10.00
rate 0.14
[tex]\frac{1000}{(1 + 0.14)^{10} } = PV[/tex]
PV 269.74
PV c $625.9339
PV m $269.7438
Total $895.6777
