A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 10 years from now?
| a. |
$950.49 |
|
| b. |
$930.11 |
|
| c. |
$865.00 |
|
| d. |
$850.49 |
|
| e. |
$1021.11 |
As per detials given in the question -
Correct Answer is option A - $950.49
To calculate yield to maturity-
Enter the stroke in the financial calculator-
Fv = 1000
PV = -925
N = 25
PMT = 85(1000*8.5%)
CPT -I/Y = 9.281
If YTM is same, calculate Price of Bond 10 years from now.
Enter Stroke in financial calculator-
FV = 1000
PMT = 85
N =10
I/Y = 9.281
CPT -PV = 950.49
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