Question

You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2019. The bonds have a par value of $2,000 and semiannual coupons.

Company (Ticker)	Coupon	Maturity	Last Price	Last Yield	EST $ Vol (000’s)
Xenon, Inc. (XIC)	6.700	Jan 15, 2036	94.313	??	57,375
Kenny Corp. (KCC)	7.250	Jan 15, 2035	??	5.40	48,954
Williams Co. (WICO)	??	Jan 15, 2042	94.865	7.10	43,815

a.	What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	What is the bond’s current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Given,

Par value = $2000

Coupon rate = 7.25%

Yield = 5.40% or 0.054

Years to maturity = 16 years ( From January 15, 2019 to January 15, 2035)

Solution :-