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What is the current price of a $1,000 par value bond maturing in 9 years with a coupon rate of 8 percent, paid annually, that has a YTM of 9 percent?

$700

$945

$940

$1,062

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Nestor Rutherford
Nestor RutherfordLv2
1 Mar 2019
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Related questions

What is the current price of a $1,000 par value bond maturing in 12 years with a coupon rate of 14 percent, paid semiannually, that has a YTM of 13 percent?

$604

$1,090

$1,060

$1,073

What is the yield to maturity (YTM) of a zero coupon bond with a face value of $1,000, current price of $940 and maturity of 9 years? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis.

Yield to maturity. Each of the bonds shown in the following table pays interest annually.

Bond Par Value Coupon Interest Rate Years to Maturity Current Value

A $1,000 9% 8 $820

B 1,000 12% 16 1,000

C 500 12% 12 560

D 1,000 15% 10 1,120

E 1,000 5% 3 900

a. Calculate the yield to maturity (YTM) for each bond.

b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.

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