Timothy has an opportunity to buy a ​$ par value corporate bond with a coupon rate of ​% and a maturity of five years. The bond pays interest annually. If Timothy requires a return of ​%, what should he pay for the​ bond?

Answer below:

Explanation:

I would ask if he wants the highest return rates possible? interested in setting money aside to take advantage of compound interest and letting it grow over time? If you choose to invest do you understand that it comes with possible risk? Do you prefer playing it safe and getting an annual return of 0 to 2 % or playing it risky by investing and getting a potential 6 to 10 % annual return?