You are considering buying a Fagel Corp. bond with a $1000 face value, 11% semi-annual coupon...
You are considering buying a Fagel Corp. bond with a $1000 face value, 11% semi-annual coupon that has 14 years left until maturity. The bond has a yield to maturity of 16%. What is the fair price of this bond?
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$726.62 |
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None of these |
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$723.72 |
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$1,353.04 |
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$607.81 |
Homework Answers
Answer: 3) $723.72
Explanation - we use financial calculator to find the value
Inputs : Fv = 1,000
I/Y = 8% , because it is semi annual
N = 28 , i.e. (14×2 )
Pmt = 55 , as it is semiannual ( 5.5% × 1,000)
PV = compute
We get, PV = $723.72
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