Question: A bond with 2 9 - year maturity was issued 4 years ago. The face value of this 9 . 6 % quarterly coupon paying

A bond with

29 -

year maturity was issued

4

years ago. The face value of this

9.6 %

quarterly coupon paying bond is $

2, 000 .

Analysts find that the current yield to maturity of this bond is

12.63

percent. Show your workings and find the value of this bond. Briefly explain the reasons for any difference between the face value and the calculated value of the bond.

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