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What is the price of a bond with the following features? Face Value = $1,000 Coupon...

What is the price of a bond with the following features?

  • Face Value = $1,000
  • Coupon Rate = 2% (stated as an ANNUAL rate)
  • Semiannual coupon payments
  • Maturity = 5 years
  • YTM = 4.8% (Stated as an APR)

State your answer to the nearest penny (e.g., 984.25)

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Homework Answers

Answer #1

Face/Par Value of bond = $1000

Semi-annual Coupon Bond = $1000*2%

= $10

No of Coupon payments(n) =No of years to maturity*2 = 5 years*2

= 10

Semi-annual YTM = 4.80%/2 = 2.40%

Calculating the Market price of Bond:-

Price = $87.975 + $788.8609

Price = $876.84

So,the current market price of these bonds is $876.84

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