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Whatever, Inc., has a bond outstanding with a coupon rate of 5.74 percent and semiannual payments. The yield to maturity is 6.1 percent and the bond matures in 20 years. What is the market price if the bond has a par value of $1,000

Respuesta :

Answer:

current market price of the bond is $958.73

Step-by-step explanation:

given data

coupon rate = 5.74 percent

yield to maturity = 6.1 percent

bond matures = 20 years

future value = $1,000

solution

we get here PMT that is

PMT =  1,000 × 5.74% ÷ 2 ...............1

PMT = $28.70

and Number of Periods is

NPER = 20 years × 2 = 40  semi-annual periods

and here Rate of interest will be =  6.1% ÷ 2 = 3.05%

and we use here formula that is

= -PV(Rate;NPER;PMT;FV;type)

so we get

current market price of the bond is $958.73

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