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Calculation of Market value of bond at various rates.

Assume a government bond has a face value of $1,000, a coupon of 6 percent, semiannual payments of interest, and a five-year maturity. If the market interest rate for such a bond is 5 percent, how much is the bond worth? How much is it worth at a market rate of 8 percent?

5% Interest
	Year 1	Year 2	Year 3	Year 4	Year 5
$1,000
6%
PV =

8% Interest
	Year 1	Year 2	Year 3	Year 4	Year 5
$1,000
6%
PV =

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