A semi-annual coupon bond has a face value of $1,000 and a coupon rate of 4.9%. Time to maturity is 16 years and the current yield to maturity is 3.8 %. How much is this bond worth? Round to the nearest cent.

A semi-annual coupon bond has a face value of $1,000 and a coupon rate of 4.9%. Time to maturity is 16 years and the current yield to maturity is 3.8 %. How much is this bond worth? Round to the nearest cent.

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 4MC

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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

A semi-annual coupon bond has a face value of $1,000 and a coupon rate of 4.9%. Time
to maturity is 16 years and the current yield to maturity is 3.8%. How much is this bond
worth? Round to the nearest cent.

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