Question

Consider a $1,000 par value bond with a 6% coupon rate paid semiannually, and has 9...

Consider a $1,000 par value bond with a 6% coupon rate paid semiannually, and has 9 years to maturity. What is the price of the bond if it is priced to yield 7%?

Homework Answers

Answer #1

Calculate the price of the bond as follows:

Therefore, the price of the bond is $934.05.

Note:

Bond is compound semiannually, therefore rate and number of periods is divided by 2.

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