the 4.50% bond of JL motors has a face value of 1,000, a maturity of 7...
the 4.50% bond of JL motors has a face value of 1,000, a maturity of 7 years, semi annual interest payments and a yield to maturity of 6.23%. what is the current market price of the bond? please give detailed instructions on how to solve on financial calculator. BA 2 plus
Homework Answers
The FV = $1000
N = 14 YEARS (SEMI - ANNUAL BOND)
PMT = 4.5%/2 * 1000 (DUE TO SEMI ANNUAL COMPOUNDING, THE ANNUAL COUPON RATE HAS TO BE DIVIDED BY 2 TO GET SEMI-ANNUAL PAYMENTS)
=$22.5
YTM = 3.12% (SIMILARLY, THE YTM HAS TO BE DIVIDED BY 2, TO GET THE SEMI -ANNUAL RATE)
COMPUTE PV
So, the current market price is :($902.52)
PV = ($902.52)
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