A bond with 14 years to maturity and a semiannual coupon rate of 7.44 percent has a current yield of 7.21 percent. The bond's par value is $2,000. What is the bond's price? O $2,063.80 O $1,031.90 O $2,040.13 O $2,086.93
A bond with 14 years to maturity and a semiannual coupon rate of 7.44 percent has a current yield of 7.21 percent. The bond's par value is $2,000. What is the bond's price? O $2,063.80 O $1,031.90 O $2,040.13 O $2,086.93
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A bond with 14 years to maturity and a semiannual coupon rate of 7.44 percent has a current yield of 7.21
percent. The bond's par value is $2,000. What is the bond's price?
O $2,063.80
O $1,031.90
O $2,040.13
O $2,086.93
Expert Solution
Step 1 Concept
Current yield of the bond is the ratio of the bonds coupon payments to its current price. Thus we can use this information to calculate the bond price.
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