Weismann Co. issued 15-year bonds a year ago at a coupon rate of 4.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current bond price

The price of the bond today is $1,042.96

Explanation:

Face value (FV): $1000

Coupon rate: 4.9%

-> counpon received annually (PMT) = $1000 * 4.9% = $49

Tenor: 15 years

YTM: 4.5%

Present value = Future Value/ (1+ YTM)^tenor

We can use excel to calculate Present Value of annual payment = PV(Rate,tenor,-PMT) = PV(4.5%,15,-49) = $526.24

The price of bond today = present value of face value + present value of coupon received annually

= 1000/(1+4.5%)^15+ 49/(1+4.5%)^15 + 49/(1+4.5%)^14+ +49/(1+4.5%)^1

= 1000/(1+4.5%)^15 + $526.24

= $1,042.96

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odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.