Sqeekers Co. issued 10-year bonds a year ago at a coupon rate of 8.2 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.5 percent, what is the current bond price

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Question:

Sqeekers Co. issued 10-year bonds a year ago at a coupon rate of 8.2 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.5 percent, what is the current bond price

Answers

Answer:The current price of the bond is $1,114.47Explanation:The computation of the current bond price is as follows:Here we have to applied the present value formula by putting the following informationGiven thatPar value = Future value = $1,000NPER = (10 - 1) × 2 = 18RATE = 6.5% ÷ 2 = 3.25%PMT = $1,000 × 8.2% ÷ 2 = 41The formula is given below:= -PV(RATE;NPER;PMT;FV;TYPE)After applying the above formula, the current price of the bond is $1,114.47

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