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You bought a 29.0-year, 8.10% semi-annual coupon bond today and the current market rate of return...

You bought a 29.0-year, 8.10% semi-annual coupon bond today and the current market rate of return is 7.60%. The bond is callable in 7.0 years with a $87.00 call premium. What price did you pay for your bond?
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Answer #1

  

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Value of Bond =

Where r is the discounting rate of a compounding period i.e. 0.076 / 2 = 0.038

And n is the no of Compounding periods 29 years * 2 = 58

Coupon 0.0810 * / 2 * 1000 = 40.5

=

= $1058.23

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