Question

An 8% semiannual coupon bond matures in 6 years. The bond has a
face value of $1,000 and a current yield of 8.3356%.

What is the bond's price? Do not round intermediate calculations.
Round your answer to the nearest cent.

$

What is the bond's YTM? (Hint: Refer to Footnote 6 for the
definition of the current yield and to Table 7.1) Do not round
intermediate calculations. Round your answers to two decimal
places.

Answer #1

**Calculation
of Bond Price**

**BP** = **
(C _{n}/(1+YTM)^{n}) +
P/(1+i)^{n}**

**C _{n} - coupon rate in the n^{th}
period**

**YTM - yield**

**P - face value**

**i - yield**

= 40/(1.08) + 40/(1.08)^{2} + 40/(1.08)^{3} +
40/(1.08)^{4} + 40/(1.08)^{5} +
40/(1.08)^{6} +1000/(1.08)^{6}

=74.074+68.587+63.506+58.802+54.447+50.414+630.1696

=184.915+630.170=**$815.085**

**Calculation of
YTM**

YTM = nFace value/Current Price -1

= **12.468**

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What is the bond's price? Do not round intermediate calculations.
Round your answer to the nearest cent.
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What is the bond's YTM? (Hint: Refer to Footnote 6 for the
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Round your answer to the nearest cent.
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Round your answer to the nearest cent.
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Round your answer to the nearest cent.
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PRICE AND YIELD
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What is the bond's price? Do not round intermediate calculations.
Round your answer to the nearest cent.
$
What is the bond's YTM? (Hint: Refer to Footnote 7 for the
definition of the current yield and to Table 7.1.) Do not round
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What is the bond's YTM? (Hint: Refer to Footnote 7 for the
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Problem 7-13
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$
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answers to two decimal places.
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