Question

(TCO D) A bond has 5 years to maturity and has a YTM of 8%. Its par value is $5,000. Its semiannual coupons are $250. What is the bonds current market price? (Show workings in Excel please)

Answer #1

Par Value | fv | = | $ 5,000 | ||||||

Maturity | nper | = | 5*2 | = | 10 | ||||

(Number of periods to mature) | |||||||||

Coupon amount | pmt | = | $ 250 | ||||||

Discount rate | rate | = | 8%*1/2 | = | 4% | ||||

Price of Bond is the present value (pv) of cash flows from bond. | |||||||||

Price of Bond |
= | =-pv(rate,nper,pmt,fv) | |||||||

= |
$ 5,405.54 |
||||||||

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