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A bond that pays interest semiannually has a coupon rate of 5.02 percent and a current yield of 5.29 percent. The par value is $1,000. What is the bond's price?

Respuesta :

hyderali230

Answer:

Bond's price is $948.96

Explanation:

Price of the bond is the present value of all cash flows of the bond. Price of the bond is calculated by following formula:

According to given data

Coupon payment = $1,000 x 5.02% = $50.2

Current Yield = 5.29%

Price of the Bond = Coupon Payment  / Current Yield

Price of the Bond = $50.2 / 5.29%

Price of the Bond = $50.2 / 0.0529

Price of the Bond = $948.9

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