A bond was issued three years ago at a price of $1,040 with a maturity of six years, a yield-to-maturity (YTM) of 5.25% compounded semi-annually, and a face value of $1,000 with semi-annualy coupons. What is the price of this bond today immediately after the receipt of today's coupon if the YTM has risen to 6.50% compounded semi-annually?
Current Price is $ 987.53
|Step-1:Calculation of semi annual coupon payment|
|Semi annual coupon payment||=pmt(rate,nper,pv,fv)|
|= $ 30.18|
|rate||=||Semi annual discount rate||=||5.25%/2||=||0.02625|
|nper||=||Semi annual number of period||=||6*2||=||12|
|pv||=||Price at the beginning||=||$ -1,040.00|
|fv||=||Face Value||=||$ 1,000.00|
|Step-2:Calculation of current Price|
|= $ 987.53|
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