Question

Kasey Corp. has a bond outstanding with a coupon rate of 5.8 percent and semiannual payments. The bond has a yield to maturity of 6.9 percent, a par value of $1,000, and matures in 13 years. What is the quoted price of the bond?

1,827.86

1,399.16

183.03

186.16

139.92

Answer 1

Using financial calculator BA II Plus - Input details:	#
I/Y = Yield = Rate = 6.9/2 =	3.45
FV = Future Value =	-$1,000
N = Number of payments = 13 x 2 =	26
PMT = Payments = FV x Coupon rate /2 =	-$29.00
CPT > PV = Present Value =	$906.58
Quoted Price = PV /10 =	90.66
Quoted Price in % =	90.66%

Quoted price is shown above based on bond information shared. Please comment if want to discuss.

Note: Options stated in question are wrong because the Yield of bond is higher than bond coupon, hence bond will trade at discount