Regatta, Inc., 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. How much will you be willing to pay for Triumph's bond today? Assume annual coupon payments. (Do not round intermediate computations. Round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The bond price is calculated using the present value of future cash flows, which include annual coupon payments and the face value at maturity. With a coupon rate of 8.25% and a yield to maturity of 6.875%, the bond price is higher than the face value, resulting in a price of approximately $1,066.