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Lion Corp. has a $4,000 par value bond outstanding with a coupon rate of 4.6 percent paid semiannually and 20 years to maturity. The yield to maturity on this bond is 2.1 percent. What is the dollar price
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Lion Corp. has a $4,000 par value bond outstanding with a coupon rate of 4.6 percent paid semiannually and 20 years to maturity. The yield to maturity on this bond is 2.1 percent. What is the dollar price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

User Nosequeldeebee
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1 Answer

5 votes

Answer:

$5.626.25

Step-by-step explanation:

The price of the Bond is its Present Value (PV) and this is calculated by using a Financial calculator as follows :

FV = $4,000

PMT = ($4,000 × 4.6%) ÷ 2 = $92.00

N = 20 × 2 = 40

P/YR = 2

I = 2.10 %

PV = ?

Thus, the dollar price of the bond is $5.626.25.

User Zenth
by
5.0k points
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