Kevin Rogers is interested in buying a five-year bond that pays a coupon of 9.8 percent...

Question

Question

Kevin Rogers is interested in buying a five-year bond that pays a coupon of 9.8 percent on a semiannual basis. The current ma

Answer 1

Answer #1

Information provided:

Par value= future value= $1,000

Coupon rate= 9.8%/2= 4.90%

Coupon payment= 0.0490*1,000= $49

Time= 5 years*2= 10 semi-annual periods

Yield to maturity= 8.8%/2= 4.4%

Press the CPT key and PV to compute the present value.

The value obtained is 1,039.7588.

Therefore, the current price of the bond is $1,039.76.

In case of any query, kindly comment on the solution

Answer 2

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