Question

What is the invoice price for a $1,000 face value 5.2% semi-annual coupon corporate bond with exactly 17 years to maturity and a yield to maturity (YTM) of 4.2%? (rounded $ to two places after the decimal)

Answer 1

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate / frequency =	2.100000
PMT =	-$26.00
N = Number of years remaining x frequency =	34
FV = Future Value =	-$1,000.00
CPT > PV = Bond value = Invoice	$1,120.64

PV = (|PMT| x ((1-(1+R%)^-N)/R%) + |FV|/(1+R%)^N

PV = (26 x ((1-(1+2.1%)^-34)/2.1%) + 1000 /(1+2.1%)^34

PV = $1,120.64