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Union Local School District has a bond outstanding with a coupon rate of 3.8 percent paid semiannually and 29 years to maturity. The yield to maturity on this bond is 2.9 percent, and the bond has a par value of $10,000. What is the price of the bond

Respuesta :

Tundexi

Answer:

$11,756.89

Explanation:

FV = 10,000

PMT = 190 (10000*3.8/2)

1/ Y = 1.45 (2.9%/2)

N = 58 (29*2)  

Using MsExcel to salve for PV

Price of the bond = PV (FV, PMT, I/Y, N)

Price of the bond = PV (10000, 190, 1.45%, 58)

Price of the bond = $11756.888

Price of the bond = $11,756.89

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