One year ago a $1000 face value 6% coupon bond was selling for $918.93. Since then, the market return decreased by two percentage points. The bond pays interest semiannually and now has four years to maturity. The bond's price today is?© BrainMass Inc. brainmass.com June 3, 2020, 8:52 pm ad1c9bdddf
Please find the revision for AT&T bond and response for your question below.
REVISION FOR AT&T bond
Calculate the ANNUAL yield to maturity for this bond
You are considering the purchase of an AT&P bond with a 13% coupon rate. Interest is paid and compounded semiannually. The bond will mature in 8 years, and has a $1000 face value. The bond currently sells for $867. Calculate the ANNUAL yield to maturity for this bond. (Round to nearest percentage)
We need to calculate how much the bonds have been issued by using the formula as follows: -
where B is the issued price
C is the coupon payment
r is the discount or yield rate
n is the period
Because we need to find the yield to maturity, we need to replace the information given into the equation and calculate for the yield to maturity.
C, which is the annual coupon payment, can be ...
This solution is comprised of a detailed explanation to answer the bonds price today.