A bond has a coupon rate of 10 percent and 4 years until maturity. If the...

A bond has a coupon rate of 10 percent and 4 years until maturity. If the yield to maturity is 10.3 percent, what is the price of the bond?

Expert Solution

Calculation of price of bond:
Particulars	Time	PVf @10.3%	Amount	PV
Cash Flows (Interest)	1.00	0.9066	100.00	90.66
Cash Flows (Interest)	2.00	0.8220	100.00	82.20
Cash Flows (Interest)	3.00	0.7452	100.00	74.52
Cash Flows (Interest)	4.00	0.6756	100.00	67.56
Cash flows (Maturity Amount)	4.00	0.6756	1,000.00	675.60
Fair Price				990.54
Price of bond is $990.54

jeff jeffy answered 1 month ago

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