What must be the price of a $2,000 bond with a 5.9% coupon rate, annual coupons,...
What must be the price of a $2,000 bond with a 5.9% coupon rate, annual coupons, and 25 years to maturity if YTM IS 9.4% APR?
a. $1,334.12
b. $1,600.95
c. $1,867.77
d. $1,067.30
Homework Answers
Answer: Option a is correct
Face value=$2000
Coupon rate is 5.9%
Coupon payment=(Coupon rate)*(Face value)=(5.9%)*(2000)=118
Time period=25 years
YTM=9.4%
We can determine the present value using excel
So, the price must be $1334.12
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