Highlander, Inc. offers 6.5% coupon bonds with annual payments and a yield to maturity of 6.94...
Highlander, Inc. offers 6.5% coupon bonds with annual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. How much would you be willing to pay for one bond?
$913.48
$902.60
$989.70
$996.48
$975.93
Homework Answers
We can take the face value of the bond as $1000 for better
calculations
Coupon rate=6.5% and coupon payments are made annually.
Coupon payment=Face value*Coupon rate=$1000*6.5%=$65
Time to maturity (or number of periods)=7 years
Yield to maturity=6.94%
We can calculate the present value of the bond using excel.
The present value of the bond=$976.24, as the present value is a
cash outflow, it is shown as negative in excel.
The closest answer in the given options is $975.93.
So, correct answer is $975.93
Add Answer to:
Highlander, Inc. offers 6.5% coupon bonds with annual payments
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Highlander inc offers 6.5% coupon bonds with payments and yield to a maturity of 6.94% percent...
Highlander inc offers 6.5% coupon bonds with payments and yield to a maturity of 6.94% percent . The bonds mature in seven years. How much would you be willing to pay for one bond? A $989.70 B $975.93 C $902.60 D $996.48 E. 913.4
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