Question

# a coupom bond that pays interest of \$60 annually and has a par value of \$1000,...

a coupom bond that pays interest of \$60 annually and has a par value of \$1000, matures in 5years and is selling today at an \$84.52 discount from par value. what is thr present value?

a coupon bond that pays interest semi- annually has a par value of \$1000, matures in 8years and has a yield to maturity of 6%. If the coupon rate is 7% the intrinstic value of the bond today will be?

Par Value = \$1,000
Discount = \$84.52

Present Value = Par Value - Discount
Present Value = \$1,000 - \$84.52
Present Value = \$915.48

Par Value = \$1,000

Annual Coupon Rate = 7.00%
Semiannual Coupon Rate = 3.50%
Semiannual Coupon = 3.50% * \$1,000
Semiannual Coupon = \$35

Time to Maturity = 8 years
Semiannual Period = 16

Annual YTM = 6.00%
Semiannual YTM = 3.00%

Intrinsic Value of Bond = \$35 * PVIFA(3.00%, 16) + \$1,000 * PVIF(3.00%, 16)
Intrinsic Value of Bond = \$35 * (1 - (1/1.03)^16) / 0.03 + \$1,000 / 1.03^16
Intrinsic Value of Bond = \$1,062.81