Bond price: Regatta Ltd has six-year bonds outstanding that pay an 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company's bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The bond price can be calculated using the present value of future cash flows, which include annual coupon payments and the face value at maturity, discounted at the yield to maturity. Given the coupon rate of 8.25% and a yield to maturity of 6.875%, the bond price is approximately $1,066.

Bond Price: Regatta Ltd Has Six-Year Bonds Outstanding That Pay