Question

A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values:

RATE
NPER
PMT
FV
TYPE

Answer 1

A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%

Given about a bond,

Face value = $1000

Coupon rate = 8% paid semiannually,

Maturity = 10 years

YTM of the bond = 9%

So, semiannual coupon payment = (8%/2) of 1000 = $40

semiannual yield = 9/2 = 4.5%

number of semiannual period = 2*10 = 20

So, RATE = 4.5%

NPER = 20

PMT = 40

FV = $1000

TYPE = 0