Kasey Corp. has a bond outstanding with a coupon rate of 5.82 percent and semiannual payments. The bond has a yield to maturity of 6.9 percent, a par value of $2,000, and matures in 24 years. What is the quoted price of the bond?

The quoted price of the bond is $1,748.41

Explanation:

The quoted price of the bond can be computed using the pv formula in excel which is given below:

=-pv (rate, nper, pmt, fv)

The rate is semiannual yield to maturity since the bond pay interest semiannually, which is 6.9%/2=3.45%

nper is the number of coupon interests the bond would pay over its entire bond life which is 24 years multiplied 2 i. e 48

pmt is the coupon interest payable semiannually which is $2000*5.82%/2=$58.20

The fv is the face value of the bond at $2000

=-pv (3.45%,48,58.20,2000) = $ 1,748.41

The bond quoted price is currently $ 1,748.41