If wine and roses, incorporated, offers a bond with a coupon of 7.5 percent with semiannual payments and a yield to maturity of 7.95 percent. the bonds mature in 15 years. The market price of a $1,000 face value bond is: $960.97.
We would be making use of financial calculator to determine the market price of the bonds by inputting the below data into the calculator
= -PV(Rate;NPER;PMT;FV;type)
Where:
PV = Present value ?
Future value = $1,000
Rate of interest = 7.95 percent / 2= 3.975
NPER =15 years × 2 = 30 years
PMT = $1,000 × 7.5% ÷ 2 = $37.5
Hence,
PV = $960.97
Therefore the market price is the amount of $960.97.
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