1.) Ninja Co. issued 14-year bonds a year ago at a coupon rate of 7.4 percent. T
ID: 2661140 • Letter: 1
Question
1.) Ninja Co. issued 14-year bonds a year ago at a coupon rate of 7.4 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.7 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))
1.) Ninja Co. issued 14-year bonds a year ago at a coupon rate of 7.4 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.7 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))
2.) Ninja Co. issued 14-year bonds a year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 6.9 percent, what is the current bond price?
Explanation / Answer
1) semi annual payment = 7.4%/2*1000 =$37
semi annual r = 5.7%/2 = 2.85% =0.0285 and n=13*2=26
so current bond price = PV(0.0285,26,37,100) =$11154.61
answer: $1154.61
2) semi annual payment = 8.6%/2 =$43
n=13*2=26 and r= 6.9%/2 = 3.45%
current bond price =PV(0.0345,26,43,100)=$115.11
answer: $1144.38
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