Question

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until​ maturity, a face...

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until​ maturity, a face value of $1,000​, and a coupon rate of 7.9% (annual payments). The yield to maturity on this bond when it was issued was 6.1%.

Assuming the yield to maturity remains​ constant, what is the price of the bond immediately before it makes its first coupon​ payment?

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Answer #1

Use the following inputs on the spreadsheet to calculate market price of the bond:

The results obtained are as follows:

Thus, the price of the bond is $1,131.86.

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