Question

A company's bonds mature in 8 years, have a face value of $1,000, and make an...

A company's bonds mature in 8 years, have a face value of $1,000, and make an annual coupon interest payment of $30.  The market requires an interest rate of 7% on these bonds.
What is the current market price of the bond?

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Answer #1

We have the bond price formula:

Where,
C = Periodic coupon payment,
P = Par value of bond,
r = Yield to maturity or current market interest rate
n = Years to maturity

Therefore,

Therefore, the current market price of the bond is $761.15

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