Five years ago Fairfield Farms Inc. issued 20 year semi-annual coupon

Five years ago Fairfield Farms Inc. issued 20 year semi-annual coupon bonds with a 9% annual coupon rate and a $1,000 face value. If the bonds currently carry a yield to maturity of 6%, what is the current price of a bond?

A) $1,346.72
B) $1,294.01
C) $1,344.10
D) $1,291.37

ANSWER

B
Explanation: B) Via Calculator: N = 15*2, I = 6/2, PMT = 45, FV = 1,000 Solve for PV = $1,294.01.