Question

Please include formulas

Problem 6-6 Bond Prices [LO 2] App Store Co. issued 13-year bonds one year ago at a coupon rate of 8 percent. The bonds make semiannual payments. Required: If the YTM on these bonds is 5.7 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Current bond price

Answer 1

and have It is face value assumed - face va asser $1000 Generally of $1000 tace value that Bonds have hence it is of Bond is is assumed redeemed at that this also it is is redeemed at par s i bond semi annwa payments here the bond makes ument's : annual rate = 8% s Somi annual = 4% Coupon payments = 1000 x 4% - the bond It is issued life of Bond semiannually life is Byears and one year ago so remaining is 12 years, because It pays it is taken as ay periods - YTM is 5.1% Porno for semi annually = S = 2.85%

STEP-2 Calculation of price of bond do I Bond price = cx !-(1+8) where vt atyn ea periodic Coupon payment a F= Face value / par value of bond - yield to maturity n = no. of periods till maturity G - (1+r)^ (1+2.85.1.) 24 3 = 0.509 44 > Joass)24 = 40 x 1-0.5oquy + 1000 x 0.50 quy 20.0285 buc hor =2 688.51+ 5o9. 44 outro ime = $ 1191.95 lita 2 pary price of Bond presently = $1191.95