Homework question help needed

Business & Finance
Tutor: None Selected Time limit: 1 Day

With celebrity bonds, celebrity raise money by issuing bonds to investors. The royalties from sales of music are used to pay interest and principal on the bonds. The bond was issued with a coupon rate of 6.5% and will mature on this day 34 years from now. The yield on the bond is currently 6.33%. At what price should this bond trade today assuming face value of $1,000 and annual coupons? The price of the bond today should be? (Round to nearest cent)

Jul 2nd, 2015

Thank you for the opportunity to help you with your question!

Price = P.V. of future payments
= 6.75%*1000*PVIFA(6.35%,37) + 1000*PVIF(6.35%,37)
= $1056.13


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 2nd, 2015

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Jul 2nd, 2015
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Jul 2nd, 2015
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