Jeffries, Inc. has 6 percent coupon bonds on the market that have 11 years left to...

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Question

Jeffries, Inc. has 6 percent coupon bonds on the market that have 11 years left to...

Jeffries, Inc. has 6 percent coupon bonds on the market that have 11 years left to maturity. Th
bonds make annual payments. If the YTM on these bonds is 7.4 percent, what is the current bond
price?

business finance

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Answer 1

Answer #1

bond price = face value / ( 1 + ytm)^n + coupon [ 1 - 1 /( 1+ytm)^n) / ytm

n is the no of years to maturity

ytm is the yield to maturity

bond price = 1000 / 1.074^11 + 60 * [ 1 - 1 /1.074^11 ] / 0.074

= 1000 / 2.193043 + 60 * 7.351521

= 455. 99 + 441.09

= $897.08

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Answer 2

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