Question

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%?

Answer #1

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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