Question

The 4.5 percent bond of JL Motors has a face value of $1,000, a maturity of 7 years, semiannual interest payments, and a yield to maturity of 6.23 percent. What is the current market price of the bond?

$945.08

$947.21

$903.05

$959.60

$912.40

Answer 1

1	Face value (FV)	$                                         1,000
2	Coupon rate	4.50%
3	Number of compounding periods per year	2
4 = 1*2/3	Interest per period (PMT)	$                                         22.50
5	Number of years to maturity	7
6 = 3*5	Number of compounding periods till maturity (NPER)	14
7	Market rate of return/Required rate of return	6.23%
8 = 7/3	Market rate of return/Required rate of return per period (RATE)	3.12%
	Bond price	PV(RATE,NPER,PMT,FV)*-1
	Bond price	$                                       903.05