Question

has a bond outstanding with a coupon rate of 5.78 percent and semiannual payments. The yield to maturity is 6.5 percent and the bond matures in 22 years. What is the market price if the bond has a par value of $1,000?

Answer 1

$916.35

Step-by-step explanation:

For this question we use the Present value function that is shown on the attachment. Kindly find it below

Provided that,

Future value = $1,000

Rate of interest = 6.5% ÷ 2 = 3.25%

NPER = 22 years × 2 years = 44 years

PMT = $1,000 × 5.78% ÷ 2 = $28.9

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the market price of the bond is $916.35