Question

A bond makes annual coupon payment of $65. If it offers a yield to maturity of...

A bond makes annual coupon payment of $65. If it offers a yield to maturity of 9.5 % :
What is the price of the bond knowing that it matures in five years?
What would have been the price if it was paying semi-annual coupons for five years?
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Answer #1

It is assumed that face value of the bond is $1,000 to be redeemed at par.

Scenario 1: Coupon paid annually.

Price of the bond=$884.81

Scenario 2: Coupon paid semi annually.

Price of the bond=$882.75

Detailed calculation using PV function of Excel as follows:

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