Question

Kasey Corp. has a bond outstanding with a coupon rate of 6.4 percent and semiannual payments. The bond has a yield to maturity of 6.1 percent, a par value of $2,000, and matures in 15 years. What is the quoted price of the bond?

Answer 1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

Bond Price =∑ [(6.4*2000/200)/(1 + 6.1/200)^k]     +   2000/(1 + 6.1/200)^15x2

k=1

Bond Price = 2058.42