You have a 2.250% $8,000 bond maturing August 14, 2025.
You purchase the bond to settle August 14, 2024 when yields are
8.250%
The purchase price of this bond is thus:
Round to 4 decimal points with work
Assuming that the coupons are paid annually, the price of the bond can be calculated by using the formula:
Where C denotes the coupon amount;
r denotes the yield;
n denotes the maturity period
It can also be calculated using the Price function in MS -Excel:
Thus, the price of the bond is $ 7,392.3788
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