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A municipal bond with a coupon rate of 2.7 percent has a yield to maturity of...

A municipal bond with a coupon rate of 2.7 percent has a yield to maturity of 3.9 percent. If the bond has 10 years to maturity, what is the price of the bond?

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Answer #1

Suppose the face value of the bond be $1000
Coupon rate=2.7%
Coupon payment=(Coupon rate)*(Face value)=(2.7%)*(1000)=27

Yield to maturity=3.9%
Time period=10 years
Using these values in excel, we can determine the bond price


2 Face value 1000 3 Time period 4 Yield to maturity 3.90% 5 Payment 6 Present value= ($902.18) 7 Formula used: PV(V4, V3, V5,

So, the price of the bond is $902.18

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