Oil Wells offers 6.5 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is $1,000

$ 975.93  

Explanation:

The market value of the bond can be computed using the pv formula in excel as follows:

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

rate is the semiannual yield to maturity i.e 6.94%/2=3.47%

nper is the number of semiannual coupon payments the bondholders would receive ,which is 7*2=14

pmt is the semiannual coupon payment=$1000*6.5%*6/12=$32.5

fv is the face value at $1000

=-pv(3.47%,14,32.5,1000)

=$ 975.93  

The price of the bond is $ 975.93   which means that it would be issued at a discount of $ 24.07   when compared to face value of $1000

answer; ///i believe that the correct answer is (post conventional)