Investing. What Is The New Price Of The Bonds, Given That They Now Have 19 Years To Maturity?

Investing : What Is The New Price Of The Bonds Given That They Now Have 19 Years To Maturity

A corporation issued 20-year, 7% annual coupon bonds at their par value of $1,000 one year ago. Today the market interest rate on these bonds has dropped to 6%. What is the new price of the bonds, given that they now have 19 years to maturity? ~~~ RayRay ~~~

Best Answer To Investing Question

If the yield to maturity is 6%, that would be 3% on a semi-annual basis; then solve for PV based on the following: FV = 1,000 and 38 semi-annual coupons of $35. Then the PV or current price of the bond is $1,

All Answer To Investing Questions

Answer 1

you divide 1000 (face value ) by the reciprocal of 6% ( which is .94) to get the current market price !

Answer 2

If the yield to maturity is 6%, that would be 3% on a semi-annual basis; then solve for PV based on the following: FV = 1,000 and 38 semi-annual coupons of $35. Then the PV or current price of the bond is $1,