Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?

Name: Bubba buys a 5% bond that matures in 15 years with a 5.10 basis. How much did he pay for the bond?
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Question

Quizplus · Accepted Answer

98.96. A calculator is not required for this. Even Bubba knows the bond is obviously trading at a slight discount by yielding 5.10% instead of the coupon rate of 5%. If the yield was the same as the coupon rate, the price is 100.00.

Bubba Buys a 5% Bond That Matures in 15 Years