What is a bond market?

Consol Bond with a face value of $1000 with a 2% coupon paid annually and the yield is 10%, what is the market?

• Consol Bond with a face value of $1000 with a 2% coupon paid annually and the yield is 10%, what is the market price of the bond? If bond price fell 5% what happens to the yield? Also, 2-year bond with a 5% coupon paid annually on a $1000 face value bond. Current market interest rate is 5%, what is the rpice of the bond? If the interest rate remains at 5% but will fall to 3% next year, how much are you willing to pay for the bond today? Thanks!

• Answer:

  For real bonds, you don't have enough information: http://en.wikipedia.org/wiki/Bond_valuation http://pages.stern.nyu.edu/~adamodar/pdfiles/valn2ed/ch33.pdf For the overly simplistic formula, turning the problem into a mathematical exercise rather than a problem in economics or finance, don't forget that a Consol Bond is an infinite annuity with no payoff of the principle. http://en.wikipedia.org/wiki/Present_value http://webpage.pace.edu/pviswanath/notes/investments/bonds.html http://www.studyfinance.com/lessons/valuation/index.mv?page=02