Question

A bond with 10 years to maturity has a face value of $1,000. The bond can...

A bond with 10 years to maturity has a face value of $1,000. The bond can be called in four years for $1050. The bond pays an 6 percent semiannual coupon, and the bond has a 2.8 percent nominal yield to maturity. What is the price of the bond today assuming that it will be called?

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Answer #1

Solution:-

Nper = 4 years * 2 = 8

PMT =

PMT = $30

Rate =

Rate = 1.40%

To Calculate price of the bond today assuming that it will be called-

Price of the bond today assuming that it will be called is $1,165.04

If you have any query related to question then feel free to ask me in a comment.Thanks.

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