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Gugenheim, Inc., has a bond outstanding with a coupon rate of 5.5 percent and annual payments. The yield to maturity is 6.7 percent and the bond matures in 11 years. What is the market price if the bond has a par value of $2,000?

Respuesta :

Answer:

Explanation:

Annual coupon=2000*5.5%=$110

Market price = Annual coupon*Present value of annuity factor(6.7%,11)+$2000*Present value of discounting factor(6.7%,11)

=110*7.61201934+2000*0.489994704  =$1817.31

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