# Investing corporate - Financial Economics by ClassOf1

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```									              Sub: Economics                                                              Topic:Financial Economics

Question:
Investing in corporate bonds - For how much money will Mark be able to

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After doing some research on the Internet, Mark is considering investing his life savings in
corporate bonds. He's not really sure what they are, however, and wants you to explain them
to him
In 2048, Mark decides he wants to sell his ACME bonds. In 44 years, ACME has never missed a
coupon payment. The final two coupon payments are still to be paid. Interest rates on
comparable bonds are currently at 5%. For how much money will Mark be able to sell each of

Solution:
Since the comparable bonds are 5% and the interest rate are also the same
So rule of thumb describe that if interest rate is more than the market rate then we would sell
the bond in discount and vice versa, if the market rate is equal to the coupon rate the bond will
have the par value only, Mark would not make any profit out of these bonds.

** End of the Solution **

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