The face value of the bond is $10,000 with annual coupon payment. The maturity periodis 6 years with the duration of 5.37 years and YTM of 14%. Determine the current marketprice of the bond.Answer Choices:a. The current market price of the bond is $10,000.00b. The current market price of the bond is $6,315.26c. The current market price of the bond is $8,051.02d. The current market price of the bond is $7,448.90

The bond duration is used to measure the actual time it takes for the bond to recover its costs…

Answered: The face value of the bond is $10,000…

The face value of the bond is $10,000 with annual coupon payment. The maturity period is 6 years with the duration of 5.37 years and YTM of 14%. Determine the current market price of the bond.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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Question

The face value of the bond is $10,000 with annual coupon payment. The maturity period
is 6 years with the duration of 5.37 years and YTM of 14%. Determine the current market
price of the bond.
Answer Choices:
a. The current market price of the bond is $10,000.00
b. The current market price of the bond is $6,315.26
c. The current market price of the bond is $8,051.02
d. The current market price of the bond is $7,448.90

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