Question

A $1,000 face value bond currently has a yield to maturity of 7.14 percent. The bond matures in sixteen years and pays interest semiannually. The coupon rate is 6.95 percent. What is the current price of this bond

Answer 1

Answer:

$982.05

Explanation:

Coupon rate = 6.95%

Years to maturity = 16

Nper = 32 (16*2)

PMT = 34.75 (1000*6.95%/2)

FV = 1000

Yield = 7.14%

Rate = Yield/2 = 3.57%

Current price of this bond = -PV(rate , nper, pmt, fv)

Current price of this bond = -PV(3.57%, 32, 34.75, 1000)

Current price of this bond = $982.05