Asked Jan 20, 2020

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%.

What was the price of this bond when it was issued?


Expert Answer

Step 1

The formula to calculate price of bond is given below,

Finance homework question answer, step 1, image 1
Step 2

Substitute $70 for coupon payment, 10 for n, 0.06 fo...

Finance homework question answer, step 2, image 1

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