Compute the price of each bond of the ABC Corporation

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Question - The ABC Corporation issued 12-year bonds on 29 April 2010. Each of these bonds has a face value of $10,000 and they are currently trading at a yield of 10.66% per annum. The bonds pay quarterly coupons at an annual rate of 7.75% per annum.

(a) Compute the price of each bond of the ABC Corporation on the settlement date (29-Dec-2014). This is the "clean price", excluding any accrued interest. Please use Actual/Actual as the interest rate basis.

(b) Use Goal Seek to find the Yield to Maturity (YTM) that would justify a price of exactly $9,000 for each of these bonds. Outline the steps you have used to obtain the answer.

Reference no: EM132752661

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