Question

Sqeekers Co. issued 10-year bonds a year ago at a coupon rate of 8.2 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.5 percent, what is the current bond price

Answer 1

The current price of the bond is $1,114.47

Step-by-step explanation:

The computation of the current bond price is as follows:

Here we have to applied the present value formula by putting the following information

Given that

Par value = Future value = $1,000

NPER = (10 - 1) × 2 = 18

RATE = 6.5% ÷ 2 = 3.25%

PMT = $1,000 × 8.2% ÷ 2 = 41

The formula is given below:

= -PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the current price of the bond is $1,114.47