Question

You are considering the purchase of a ​$ par value bond with a coupon rate of ​% ​(with interest paid​ semiannually) that matures in years. If the bond is priced to yield ​%, what is the​ bond's current​ price?

Answer 1

Answer:

$885.65

Explanation:

Missing word "You are considering the purchase of a $1,000 par value bond with an 6.5% coupon rate (with interest paid semiannually) that matures in 12 years. If the bond is priced to provide a required return of 8%, what is the bond’s current price?"

Rate = 8% / 2

Nper = 12 * 2 = 24

Pmt = 1,000 * 6.5% / 2  = 32.5

FV = 1,000

​Bond's current​ price = PV(rate, nper, pmt, fv)

​Bond's current​ price = PV(8%/2, 24. 32.5, 1000)

​Bond's current​ price = $885.65

So, the​ bond's current​ price is $885.65