Question

Ninja co. issued 14-year bonds a year ago at a coupon rate of 6.9 percent. the bonds make semiannual payments. if the ytm on these bonds is 5.2 percent, what is the current bond price?

Answer 1

Par=1000
t=13 years to maturity (original time to maturity = 14 years but the bond wasissued a year ago) = 26 semiannual periods
C=6.9% annually = 3.45% semiannually
YTM=5.2% annually = 2.6% semiannually

P = $34.50({1 – [1/(1 + .026)]26} / .026) + $1,000[1 / (1 + .026)26] = $1,159.19