HW 7.a (Current price of bond)

Wesimann Co. issued 10-year bonds a year ago at a coupon rate of 7.6 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 5.9 percent, what is the current bond price?

$1,117.40 N= 9x2= 18 I/Y= 5.9/2= 2.95 PMT= 76/2= 38 FV= 1000 CPT PV= $1,117.40

Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.3 percent paid semiannually and 17 years to maturity. The yield to maturity on this bond is 4.5 percent. What is the price of the bond?

$1,952.83 N= 17x2= 34 I/Y= 4.5/2= 2.25 PMT= 43 FV= 2,000 CPT PV= $1,952.83

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 6.2 percent paid annually. If the yield to maturity is 7.3 percent, what is the current price of the bond?

Euro 886.13 N= 20 I/Y= 7.3 PMT= 62 FV= 1000 CPT PV= 886.13