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gugenheim, inc. offers a 7% coupon bond with annual payments. the yield to maturity is 5.85% and the maturity date is 9 years. what is the market price of a $1,000 face value bond? question 9 options: $742.66 $868.67 $869.67 $1,078.73 $1,079.59

User Jcrshankar
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Final answer:

The market price of the bond is $869.67.

Step-by-step explanation:

The market price of a bond is determined by its yield to maturity and the interest rate environment. In this case, Gugenheim, Inc. offers a 7% coupon bond with an annual yield to maturity of 5.85% and a maturity date of 9 years. To calculate the market price of the bond, you can use the present value formula:

PV = C * (1 - (1 + r)^-n) / r + F * (1 + r)^-n

where PV is the present value, C is the coupon payment, r is the yield to maturity, n is the number of periods, and F is the face value of the bond. Plugging in the given values, we find that the market price of the bond is $869.67.

User Fadila
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