A10-year bond pays 5% on a face value of $1,000 similar bonds currently yielding 10%. what is the market value of the bond?

The market value of the bond is $692.74.

Explanation:

Given that,

10-year bond pays = 5%

Face value = $1,000

Bonds currently yielding = 10%

Annual payment = 5% of $1,000

                            = $50

According to the annuity table (attached with the answer),

10 annual payments of $50 at 10% = 6.144

So, the present value of the interest payments = $50 × 6.144

                                                                              = $307.2

present value of the principal repayment at the end of 10 years:

=

= $385.54

Hence,

$307.2 +  $385.54 = $692.74

The market value of the bond is $692.74.

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.

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