Question
You are considering a 15-year, $1,000 par value bond. Its coupon rate is 9%, and interest...
You are considering a 15-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually.
| Bond valuation | |||
| Years to maturity | 15 | ||
| Par value of bond | $1,000.00 | ||
| Coupon rate | 9.00% | ||
| Frequency interest paid per year | 2 | ||
| Effective annual rate | 7.64% | ||
| Calculation of periodic rate: | Formulas | ||
| Nominal annual rate | #N/A | ||
| Periodic rate | #N/A | ||
| Calculation of bond price: | Formulas | ||
| Number of periods | #N/A | ||
| Interest rate per period | 0.00% | ||
| Coupon payment per period | #N/A | ||
| Par value of bond | $1,000.00 | ||
| Price of bond | #N/A |
If you require an "effective" annual interest rate (not a nominal rate) of 7.64%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.
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