Aloha Inc. has 5.5 percent coupon bonds on the market that have 10 years left to

Question

Aloha Inc. has 5.5 percent coupon bonds on the market that have 10 years left to maturity. If the YTM on these bonds is 6.42 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Aloha Inc. has 5.5 percent coupon bonds on the market that have 10 years left to maturity. If the YTM on these bonds is 6.42 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

Let the face value be 1000 Yield to Maturity = Coupon Rate+ FV-BV/n/FV+BV/2 .0642= 55+1000-x/10/55+x/2 .0642=1550-x)2/(55+x)10 3100-X = 35.31+.642X 1.642X = 3100-35.31 X = 3100-35.31/1.64 1890.244 Price is $ 1890.25 Price of the bond is $ 1890.25

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