Question

Weismann Co. issued 16-year bonds a year ago at a coupon rate of 8 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 7 percent, what is the current bond price?

Multiple Choice

• $1,101.96

• $1,065.47

• $647.95

• $1,647.72

• $1,091.96

Answer 1

Ans:- In this question, we need to find the current price of the bond.we will use the PV function excel to find the Price of the bond.

Rate=7%/2, Nper=15*2=30 (since the bond was issued 1 year ago so the number of years left is 15 and nper will be 30),Pmt=-$1,000*8%/2 = -$40, FV=-$1,000.

Therefore, the current price of the bond is $1,091.96.option (e) is the right answer.

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