Problem 7-6 Bond Prices [LO2] Ninja Co. issued 12-year bonds a year ago at a cou

Question

Problem 7-6 Bond Prices [LO2]

Ninja Co. issued 12-year bonds a year ago at a coupon rate of 7.2 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))

Ninja Co. issued 12-year bonds a year ago at a coupon rate of 7.2 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Hi,

Please find the correct answer as follows:

Lets assume that the Face Value of the bond is $1000

Price of the bond = 36*(1-(1+5.5%/2)^(-22))/(5.5%/2)+1000/(1+5.5%/2)^22

=$1138.92

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