Question

Weismann Co. issued 15-year bonds a year ago at a coupon rate of 4.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Bond price = 1041.22.  There is only 14 years left (issued 15 year bonds a year ago)

Answer 2

ANSWER = $1,043.29

F = Face value = 1,000

C = Coupon payment = 4.9% x 1,000 x 0.5= 24.5

r = Yield to maturity = 4.5% / 2 = 2.25%

n = Time period = 15 x 2 = 30yrs

NOTE : Since the bond makes semiannual payments, the coupon payment and YTM are halved and time period has been multiplied by 2.