Five years ago, Thompson Tarps Inc. issued twenty-five-year 10% annual coupon bonds with a $1,000 face value each. Since then, interest rates in general have risen and the yield to maturity on the Thompson bonds is now 12%
Given this information, what is the price today for a Thompson Tarps bond?
A) $843.14
B) $850.61
C) $1,181.54
D) $1,170.27
Answer: B
Explanation: B)
Bond Price = PMT × +
= $100 × + = $850.61.
MODE = END
INPUT 20 12 0 -100 -1,000
KEY N I/Y PV PMT FV
CPT 850.61
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