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Guggenheim, Inc. offers a 6.2% coupon bond with annual payments. The yield to maturity is 5.85%...

Guggenheim, Inc. offers a 6.2% coupon bond with annual payments. The yield to maturity is 5.85% and the maturity date is 9 years. What is the market price of a $880 face value bond?

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Answer #1

Information provided:

Face value= Future value= $880

Time= 9 years

Coupon rate= 6.2%

Coupon payment= 0.062*880= $54.56

Yield to maturity= 5.85%

The market price is calculated by computing the present value of the bond.

Enter the below in a financial calculator to calculate the market price of the bond:

FV= 880

N= 9

PMT= 54.56

I/Y= 5.85

Press the CPT key and PV to compute the present value of the bond.

The value obtained is $901.09.

Therefore, the market price of a $880 face value bond is $901.09.

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