Question

1. Ping Inc. issued 10-year, $1000 bonds two years ago at a coupon rate of 7%. Interest is paid semiannually. If the market rate or YTM is 6.5%, what is the current bond price?

   	A.	$1,092.43
   	B.	$1,030.81
   	C.	$896.35
   	D.	$1,216.45
   	E.	None of the above

Answer 1

Price of Bond = PV of Cfs from it.

Period	CF	PVF @3.25%	Disc CF
1	$      35.00	0.9685	$      33.90
2	$      35.00	0.9380	$      32.83
3	$      35.00	0.9085	$      31.80
4	$      35.00	0.8799	$      30.80
5	$      35.00	0.8522	$      29.83
6	$      35.00	0.8254	$      28.89
7	$      35.00	0.7994	$      27.98
8	$      35.00	0.7742	$      27.10
9	$      35.00	0.7499	$      26.25
10	$      35.00	0.7263	$      25.42
11	$      35.00	0.7034	$      24.62
12	$      35.00	0.6813	$      23.84
13	$      35.00	0.6598	$      23.09
14	$      35.00	0.6391	$      22.37
15	$      35.00	0.6189	$      21.66
16	$      35.00	0.5995	$      20.98
17	$      35.00	0.5806	$      20.32
18	$      35.00	0.5623	$      19.68
19	$      35.00	0.5446	$      19.06
20	$      35.00	0.5275	$      18.46
20	$ 1,000.00	0.5275	$    527.47
Value of Bond			$ 1,036.35

OPtion E is correct.