YUNY Corp. has $1,000 par value 7.5% coupon bonds outstanding. The remaining maturity is ten (10) years. The coupon is paid semi-annually. The yield to maturity is 5.0% p. a. What is the current market price of the bond?
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Step 1
Since the coupon is paid semi-annually, there will be 2 payments per year. With a remaining maturity of 10 years, the total number of payments will be 2 * 10 = 20 payments. The semi-annual coupon rate is half of the annual coupon rate, so it is 7.5% / 2 = 3.75%. Show more…
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