A bond is scheduled to mature in five years.Its coupon rate is 9 percent with interest paid annually.This $1,000 par value bond carries a yield to maturity of 10 percent.What is the bond's current market price?

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$1,000 face value, 9% annual coupon, 5 year maturity, 10% rate
    11efb876_50bb_c801_9137_21e2098fd3f1_TB1314_00 The correct answer is A because the bond's current market price is $962.09. This is calculated using the formula:Bond Price = (C / r) * (1 - 1 / (1 + r)^n) + F / (1 + r)^nWhere:C = coupon paymentr = yield to maturityn = number of years to maturityF = face valueIn this case, the coupon payment is $90 (9% of $1,000), the yield to maturity is 10%, the number of years to maturity is 5, and the face value is $1,000. Plugging these values into the formula, we get:Bond Price = (90 / 0.10) * (1 - 1 / (1 + 0.10)^5) + 1000 / (1 + 0.10)^5= $962.09

A Bond Is Scheduled to Mature in Five Years