A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond...
A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond matures in 3 years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond?
Homework Answers
I basically plugged in the following into a financial calculator:
N = 3 years
I = 6.69%
PMT = 70 (the annual coupon payments)
FV = 1000
This returns PV = -$1008.18
I guess that makes sense. The coupon rate is higher than the market rate, so we have to pay a very small premium above $1000.
Present value of bond = 
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