Roca Corporation has an outstanding bond with a coupon rate of 8.0 percent that matures in...

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Roca Corporation has an outstanding bond with a coupon rate of 8.0 percent that matures in 10 years. The bond pays interest s

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Answer 1

Answer #1

Answer is $1,149

Face Value = $1,000

Annual Coupon Rate = 8.00%
Semiannual Coupon Rate = 4.00%
Semiannual Coupon = 4.00% * $1,000
Semiannual Coupon = $40

Time to Maturity = 10 years
Semiannual Period = 20

Annual YTM = 6.00%
Semiannual YTM = 3.00%

Market Value = $40 * PVIFA(3.00%, 20) + $1,000 * PVIF(3.00%, 20)
Market Value = $40 * (1 - (1/1.03)^20) / 0.03 + $1,000 * (1/1.03)^20
Market Value = $40 * 14.877475 + $1,000 * 0.553676
Market Value = $1,149

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Answer 2

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