Hi, i have a question from qbank and i like to how to calculate the bond future price using the BA 2 plus calculator An investor buys a 20-year, 10% semi-annual bond for $900. She wants to sell the bond in 6 years when she estimates yields will be 10%. What is the estimate of the future price? A) $1,079. B) $1,000. C) $946. Your answer: A was incorrect. The correct answer was B) $1,000. Since yields are projected to be 10% and the coupon rate is 10%, we know that the bond will sell at par value. The values i input in the calculator are: PV = -900 PMT = 100/2 n = 6*2 I/Y = 10/2 CPT FV = 820.41 The future value i get is $820.41. Actually is there anything wrong with the values i input?
You’re assuming that current yields are 10%, but in the structure of the question, it doesn’t really matter what current yields are nor is it given. There are no calculations required in the problem - since Yield = Coupon at in 6 years (10% = 10%) it would sell at par value = $1000.