Question

6 years ago, you purchased a 15-year, 9% semiannual coupon bond with a yield to maturity of 10%. How much is the bond worth now? Round to 2 decimal places. Write your answer in the format $1,111.83

Answer 1

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6 years ago, the bond is for 15 years. So now the bond is for 9 years.

N = 9 * 2 = 18  (The Bond is for 9 years, as semiannual, so 18 payments)

PMT => 9% of 1,000 = 90 / 2 = -45 ( The coupon 9% is on Face Value, as semiannual, so divided by 2)

FV = -1,000 (The Face value of bond is $1,000)

I/Y = 10 / 2 = 5 (Annual Interest is 10%, semiannual so divided by 2)

CPT + PV = 941.5520

The current bond price is $941.5520

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