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Use the information to answer the following questions. A bond with a face value of $1,000 matures in 12 years and has a 9% semiannual coupon. The bond has a nominal yield to maturity of 6.85%, and it can be called in 4 years at a call price of $1,045. Assume equilibrium, what is the price of the bond?

Respuesta :

Answer:

the price of the bond is $1,174

Explanation:

The computation of the price of the bond is shown below:

Given that

Future value = $1,000

NPER = 12 × 2 = 24

PMT = $1,000 × 9% ÷ 2 = $45

RATE = 6.85% ÷ 2 = 3.43%

The formula is shown below:

= -PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the price of the bond is $1,174

We simply applied the present value formula

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