Roadside Markets has a 6.75 percent coupon bond outstanding that matures in 30 years. The bond...

Roadside Markets has a 6.75 percent coupon bond outstanding that matures in 30 years. The bond pays interest annually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 7.2 percent? (round your answer to two decimal places)

Solutions

Expert Solution

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

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

rate=yield to maturity=7.2%

nper=30 years

pmt=coupon=coupon rate*face value=6.75%*1000=67.5

fv=face value=1000

=PV(7.2%,30,67.5,1000,0)=$945.26

price of the bond=$945.26

jeff jeffy answered 2 years ago

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