Question
In: Finance
The yield to maturity of a $1,000 bond with a 7.1% coupon rate, semiannual coupons, and...
The yield to maturity of a $1,000 bond with a 7.1% coupon rate, semiannual coupons, and two years to maturity is 8.3% APR, compounded semiannually. What is its price?
Solutions
Expert Solution
Semiannual interest = $1,000 * 0.071 * 6/12 = $35.5
Current bond price = $35.5(PVIFA 4.15%,4) + $1,000(PVIF 4.15%,4)
Current bond price = ($35.5 * 3.61709977581) + ($1,000 * 0.84989035927)
Current bond price = $978.30
jeff jeffy answered 2 years agoRelated Solutions
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