What is the price of a bond with a coupon rate of 7%, payable semi-annually, a face value of $1000, 8 years to maturity, and a yield to maturity of 7.7%?
Face Value | $ 1,000 |
Coupon Rate | 7.00% |
Discounting Rate | 7.70% |
Redemption Value | $ 1,000 |
Years To Maturity | 8 |
Coupon Payment Duration | Semi-Annually |
a | Semi-annual Interest Amount | $ 35.00 |
($1000*7%/2) | ||
b | PV Annuity Factor for (16 Years,3.85%) | 11.782299 |
c | Present Value Of Annual Interest (a*b) | $ 412.38 |
d | Redemption Value | $ 1,000.00 |
e | PV Factor Of (16 Years,3.85%) | 0.54638 |
g | Present Value Of Redemption Amount (d*e) | $ 546.38 |
f | Intrinsic Value ( Price ) Of The Bond (c+g) | $ 958.76 |
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