Question

Bond prices. Price the bonds from the following table with annual coupon

a. Find the price for the bond in the following​ table:

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$1,000.00	9​%		30	11​%		​?
​$1,000.00	10​%		10	8​%		​?
​$5,000.00	11​%		5	10​%		​?
​$5,000.00	8​%		5	12​%		​?

Answer 1

Calculation of bond price:

a)

Particulars	Period	Cash flows (1)	Discount rate @11% (2)	Discounted cash flows (3) (1*2)
Interest	1-30	1,000*9%=90	8.694	782.46
Principal	30	1000	1/(1.11)^30=0.0437	43.7
			Price	826.16

b)

Particulars	Period	Cash flows (1)	Discount rate @8%(2)	Discount cash flows (3) (1*2)
Interest	1-10	1,000*10%=100	6.71	671
Principal	10	1,000	1/(1.08)^10=0.463	463
			Price	1134

Particulars	Period	Cash flow (1)	Discount rate@10% (2)	Discounted cash flows (3) (1*2)
Interest	1-5	5,000*11%=550	3.791	2085.05
Principal	5	5,000	1/(1.1)^5=0.621	3105
			Price	5190.05

Particulars	Period	Cash flow (1)	Discount rate @12%(2)	Discounted cash flows (3) (1*2)
Interest	1-5	5,000*8%=400	3.605	1442
Principal	5	5,000	1/(1.12)^5=0.567	2835
			Price	4277