In: Finance
An 10-year IBM bond is currently selling for $791.36. The coupon rate is 10% paid annually. What will be the price of the bond six years from today if the same yield to maturity hold?
$855.81
$936.60
$783.72
$844.46
$813.56
Price of Bond =791.36
Par value =1000
Coupon =10%*1000 =100
Number of Years =10
YTM using financial calculator
N=10;PMT=100;PV=-791.36;FV=1000;CPT I/Y =14%
Price with number of periods left 6 years =PV of Coupons+PV of Par
Value
=100*(((1-(1+14%)^-6)/14%)+1000/(1+14%)/6 =844.46(option d is correct
option)