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Consider a two year 6% coupon bond that sells at a discount rate of 7% APR....

Consider a two year 6% coupon bond that sells at a discount rate of 7% APR. At what price should the bond sell?

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Expert Solution

Use PV function in EXCEL to find the price of the bond

=PV(rate,nper,pmt,fv,type)

rate=discount rate=7%

nper=2 years

pmt=coupon pay=(coupon rate*face value)=(6%*1000)=60

fv=face value=1000

=PV(7%,2,60,1000,0)=$981.92

The current selling price=$981.92

jeff jeffy answered 2 years ago
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