Answered

Find the best solutions to your questions at Westonci.ca, the premier Q&A platform with a community of knowledgeable experts. Discover a wealth of knowledge from experts across different disciplines on our comprehensive Q&A platform. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

3Ts Corp. will start selling 10-year bonds today. The bonds have semiannual coupon payments, an annual coupon rate of 8%, and a par value of $1,000. The yield to maturity (YTM) for this bond is expected to be 10%. What is the price of the bond today? A. 770.60 B. 811.67 C. 1,000.00 D. 877.11 E. 875.38

Sagot :

Answer:

E. 875.38

Explanation:

The computation of the price of the bond today is as follows

Given that

Future value = $1,000

PMT = $1,000 ×8% ÷2 = $40

NPER = 10 × 2 = 20

RATE = 10% ÷ 2 = 5%

The formula is given below:

= -PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula the price of the bond today is $875.38

Here the present value formula is applied to determine the same

Therefore the last option i.e. E is correct

Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.