Ask Question
10 October, 06:30

Whatever, Inc., has a bond outstanding with a coupon rate of 5.84 percent and semiannual payments. The yield to maturity is 6.1 percent and the bond matures in 25 years. What is the market price if the bond has a par value of $1,000

+1
Answers (1)
  1. 10 October, 06:52
    0
    The answer is $966.87

    Explanation:

    It is a semiannual paying coupon.

    N (Number of periods) = 50 years (25 years x 2)

    I/Y (Yield to maturity) = 3.05percent (6.1 percent : 2)

    PV (present value or market price) = ?

    PMT (coupon payment) = $29.2 ([5.84 percent: 2] x $1,000)

    FV (Future value or par value) = $1,000.

    We are using a Financial calculator for this.

    N = 50; I/Y = 3.05; PMT = 29.2; FV = $1,000; CPT PV = - 966.87

    Therefore, the market price of the bond is $966.87
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Whatever, Inc., has a bond outstanding with a coupon rate of 5.84 percent and semiannual payments. The yield to maturity is 6.1 percent and ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers