Answered: What must be the price of a $1,000 bond…

What must be the price of a $1,000 bond with a 5.8% coupon rate, annual coupons, and 15 years to maturity if YTM is 10.5% APR? OA. $652.49 OB. $913.49 OC. $521.99 D. $782.99

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 8P

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

What must be the price of a $1,000 bond with a 5.8% coupon rate, annual coupons, and 15 years to maturity if YTM is
10.5% APR?
O A. $652.49
OB. $913.49
O C. $521.99
O D. $782.99

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