Question

Kasey Corp. has a bond outstanding with a coupon rate of 5.9 percent and semiannual payments. The bond has a yield to maturity of 4.9 percent, a par value of $1,000, and matures in 21 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 =21x2

Bond Price =∑ [(5.9*1000/200)/(1 + 4.9/200)^k]     +   1000/(1 + 4.9/200)^21x2

k=1

Bond Price = 1130.24