The YTM of a 1,000 with a 10% coupon rate, semiannual coupons, and two years to...

The YTM of a 1,000 with a 10% coupon rate, semiannual coupons, and two years to maturity is 6.5% APR, compounded semiannually.

a. What must its price be ?

972.69

none of the above

1,063.72

1,046.66

948.61

Solutions

Expert Solution

FV = 1000
PMT = 1000 * 10% / 2 = 50
Nper = 2 * 2 = 4
Rate = 6.5% / 2 = 3.25%

Price of the bond can be calculated by using the following excel formula:
=PV(rate,nper,pmt,fv)
=PV(3.25%,4,-50,-1000)
= 1,064.66

Price of the bond = 1,064.66

jeff jeffy answered 1 year ago

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