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Valuing Bonds?Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 23...

Valuing Bonds?Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 23 years Coupon rate: 7 percent Semiannual payments Calculate the price of this bond if the YTM is 7 percent: ( I need to following information)

Settlement
Maturity
Rate
YTM
Redemption
Frequency
Basis
Bond Price
Multiply by 10
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Homework Answers

Answer #1

A coupon-bearing bond may be priced with the following formula:

where:

C = the periodic coupon payment

y = the yield to maturity (YTM)

F = the bond’s par or face value

t = time

T = the number of periods until the bond’s maturity date

P = 70* PVAF of 7% for 23 Years + 1070* PV of 7% in 23rd Year

= 789 + 226

= 1015

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