A $1000 face value bond,with a 7.5% coupon rate paid semi-annually and maturing in five years,is currently yielding 6.4% in the market.What is the current price of the bond?

Question

Quizplus · Accepted Answer

To calculate the price of the bond, we need to use the following formula: 
Price = (C/2) x [1 - 1/(1 + r/2)^n] + (FV)/(1 + r/2)^n
where C is the coupon payment, r is the yield, n is the number of periods, and FV is the face value. 
Plugging in the values given, 
Price = (7.5/2) x [1 - 1/(1 + 0.064/2)^(5x2)] + (1000)/(1 + 0.064/2)^(5x2) 
Price = $1046.44 
Therefore, the correct answer is C.

A $1000 Face Value Bond,with a 7