Question

Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.4 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 4.8 percent. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

$1,923.29

Explanation:

Price of the bond is its PV. Using financial calculator, key in the following inputs;

FV; Face value of a bond = 2,000

PMT; semi-annual coupon payment = (4.4%/2) *2,000 = 44

N; Total duration of investment = 13*2 = 26

I/Y; Semiannual interest rate in this case = 4.8% /2 = 2.4%

then CPT PV = 1,923.29

Therefore, the price of this bond is $1,923.29