Question

a company just issued a 2-year, $1,000 face, 5% coupon bond at a yield of 6%. a. (3 points) what price will the company sell this bond for

Answer 1

Price = (50 / (1 + 0.06)^1) + (50 / (1 + 0.06)^2) + (1,050 / (1 + 0.06)^2) Price ≈ $935.82

Step-by-step explanation:

Price = (Coupon payment / (1 + Yield)^1) + (Coupon payment / (1 + Yield)^2) + … + (Coupon payment + Face value / (1 + Yield)^n)