Answered: What is the price of a 20-year bond…

What is the price of a 20-year bond with a FV of $1,000 that pays a 6% coupon (semi-annually)? The bond's YTM is 8.8%. $816.30 $462.91 $740.72 $783.66

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 14P: Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has...

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

What is the price of a 20-year bond with a FV of $1,000 that pays a 6% coupon
(semi-annually)? The bond's YTM is 8.8%.
$816.30
$462.91
$740.72
$783.66

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