Consider the Weston Co. 6-year bonds issued with annual coupon of 9.8% but with coupons paid...

Consider the Weston Co. 6-year bonds issued with annual coupon of 9.8% but with coupons paid every six months. If such bonds are generally paying an annual interest rate of 12% , what should it be the price of the bonds at the time of issuance?

Solutions

Expert Solution

M = $1000, n = 6 * 2 = 12 semi-annual periods, i = 12%/2 = 6% (semi-annually), C = 9.8% * $1000/2 = $49 (semi-annually)

P = $410.81 + $496.97

P = $907.78

jeff jeffy answered 2 years ago

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