Question

​Harpeth Valley Water District has a bond outstanding with a coupon rate of 2.67 percent and semiannual payments


Harpeth Valley Water District has a bond outstanding with a coupon rate of 2.67 percent and semiannual payments The bond matures in 11 years, with a yield to maturity of 349 percent, and a par value of $5,000. What is the market price of the bond? 


Multiple Choice

  •  $4,641.36

  •  $4,628.13

  •  $4720.69

  •  $4,635.25

  •  $4.630.73


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Answer #1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS OPTION B : $4,628.13

Given that:

Future Value = $5,000

Coupons = $66.75

Periods to maturity = 11*2 = 22

YTM = 1.745%

Using excel function, "=PV(3.49%/2,11*2,-2.67%*5000/2,-5000,0)", we get PV = $4,628.13

I hope this solves your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

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