Question

Luxury properties offers bond with a coupon rate of 9.5% paid semiannually. The yield to maturity is 11.2% and the maturity date is 11 years from today. What is the market price of this bond if the face value is $1,000?

Solve using excel

Answer #1

Coupon Rate |
9.50% | ||

YTM |
11.20% | ||

Maturity |
11 | ||

Payment |
0.5 | (Semi-Annually) | |

Face Value |
1000 | ||

Time |
Coupon Payment |
Final Payment |
Present Value |

0.5 | 47.5 | 45.04 | |

1 | 47.5 | 42.72 | |

1.5 | 47.5 | 40.51 | |

2 | 47.5 | 38.41 | |

2.5 | 47.5 | 36.43 | |

3 | 47.5 | 34.54 | |

3.5 | 47.5 | 32.76 | |

4 | 47.5 | 31.07 | |

4.5 | 47.5 | 29.46 | |

5 | 47.5 | 27.94 | |

5.5 | 47.5 | 26.49 | |

6 | 47.5 | 25.12 | |

6.5 | 47.5 | 23.82 | |

7 | 47.5 | 22.59 | |

7.5 | 47.5 | 21.42 | |

8 | 47.5 | 20.32 | |

8.5 | 47.5 | 19.27 | |

9 | 47.5 | 18.27 | |

9.5 | 47.5 | 17.33 | |

10 | 47.5 | 16.43 | |

10.5 | 47.5 | 15.58 | |

11 | 47.5 | 1000 | 325.84 |

Market Price | 911.36 |

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