Duffy Co. issued 15 year bonds one year ago at a coupon rate of 7.6%. The...

Question

Question

Duffy Co. issued 15 year bonds one year ago at a coupon rate of 7.6%. The bonds make semiannual payments.

If the YTM on these bonds is 5.3 percent, what is the current dollar price assuming a par value of $1000.

Answer 1

Answer #1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

Bond Price =∑ [(7.6*1000/200)/(1 + 5.3/200)^k] + 1000/(1 + 5.3/200)^15x2

k=1

Bond Price = 1235.95

Answer 2

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