Answered

Discover answers to your questions with Westonci.ca, the leading Q&A platform that connects you with knowledgeable experts. Experience the ease of finding accurate answers to your questions from a knowledgeable community of professionals. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

Layton Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.6 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 3.8 percent. What is the dollar price of the bond

Sagot :

facundobuzzetti

Answer:

Bond Price​= $2,162.94

Explanation:

Giving the following information:

Par value= $2,000

YTM= 0.038/2= 0.019

Coupon= (0.046/2)*2,000= $46

Years to maturity= 13*2= 26

To calculate the price of the bond, we need to use the following formula:

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 46*{[1 - (1.019^-26)] / 0.019} + [2,000 / (1.019^26)]

Bond Price​= 936.91 + 1,226.03

Bond Price​= $2,162.94

We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.