What is the current price of a $1,000 par value bond with an annual coupon rate of 5% that pays coupons semi-annually if the bond matures in two years and has a yield-to-maturity of 6%? A. $981.67 B. $965.35 C. $981.41 D. $1074.34
Added by Juan Luis G.
Step 1
The annual coupon rate is 5%, so the semi-annual coupon rate is 2.5% (5% divided by 2). The semi-annual coupon payment is therefore $25 (2.5% of $1,000). Show more…
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