Please correct answer and don't use hand raiting You just paid $980.30 for an 8% (annual) coupon bond with a Face Value of $1,000 thatmatures in 5 years. You plan to hold the bond only for 1-year. If you want to earn a 9% rate ofreturn on this investment, what price must you sell the bond for? Is this realistic?

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Answered: You just paid $980.30 for an 8%…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Please show how to work this out.
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You just paid $980.30 for an 8% (annual) coupon bond with a Face Value of $1,000 that matures in 5 years. You plan to hold the bond only for 1-year. If you want to earn a 9% rate of return on this investment, what price must you sell the bond for? Is this realistic?