Question

Oil Well Supply offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price per bond if the face value is $1,000?

$1,401.26

$1,016.95

$1,401.86

$953.88

$953.28

Answer 1

Price of Bond = PV of CFs from it.

Period	CF	[email protected]%	Disc CF
1	$      35.00	0.9628	$   33.70
2	$      35.00	0.9270	$   32.44
3	$      35.00	0.8925	$   31.24
4	$      35.00	0.8593	$   30.07
5	$      35.00	0.8273	$   28.95
6	$      35.00	0.7965	$   27.88
7	$      35.00	0.7669	$   26.84
8	$      35.00	0.7383	$   25.84
9	$      35.00	0.7108	$   24.88
10	$      35.00	0.6844	$   23.95
11	$      35.00	0.6589	$   23.06
12	$      35.00	0.6344	$   22.20
13	$      35.00	0.6108	$   21.38
14	$      35.00	0.5881	$   20.58
15	$      35.00	0.5662	$   19.82
16	$      35.00	0.5451	$   19.08
17	$      35.00	0.5248	$   18.37
18	$      35.00	0.5053	$   17.69
18	$ 1,000.00	0.5053	$ 505.31
Bond Price			$ 953.28

Option E is correct.