Calculation Of Fair Market Price Of A Bond

Question

You are considering the purchase of a corporate bond. The bond has six years to maturity, a face value of $1000, and pays coupons semi-annually at a rate of 6.8%. The current yield-to-maturity (market interest rate) for bonds of this risk is 5.0%. What is the fair market price of the bond? Is the bond trading at a discount or a premium?

 

Summary

The question belongs to Finance and it discusses about calculation of fair market price for a bond with 6 years maturity and pays off semi-annually.

Total Word Count 83

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