A bond coupon rate of 10.5%, interest made annually, bond matures in 20 years. Price willing to pay for bond?

Question

A bond coupon rate of 10.5%, interest made annually, bond matures in 20 years. Price willing to pay for bond?

Answer 1

It depends on what the market is paying for similar securities. If the market rate is also 10.5%, the bond will sell for its face value. If market is more than 10.5%, it will sell at a discount (i.e. less than face value). If market is less than 10.5%, it will sell at a premium.