Question

A bond with 10 years to maturity has a face value of $1,000.  The bond pays an 8 percent semiannual coupon, and the bond has a 10.8 percent nominal yield to maturity.  What is the price of the bond today?

Answer 1

Price of Bond = PV of CFs from it.

Period	CF	PVF @5.4%	Disc CF
1	$      40.00	0.9488	$   37.95
2	$      40.00	0.9002	$   36.01
3	$      40.00	0.8540	$   34.16
4	$      40.00	0.8103	$   32.41
5	$      40.00	0.7688	$   30.75
6	$      40.00	0.7294	$   29.18
7	$      40.00	0.6920	$   27.68
8	$      40.00	0.6566	$   26.26
9	$      40.00	0.6229	$   24.92
10	$      40.00	0.5910	$   23.64
11	$      40.00	0.5607	$   22.43
12	$      40.00	0.5320	$   21.28
13	$      40.00	0.5047	$   20.19
14	$      40.00	0.4789	$   19.16
15	$      40.00	0.4544	$   18.17
16	$      40.00	0.4311	$   17.24
17	$      40.00	0.4090	$   16.36
18	$      40.00	0.3880	$   15.52
19	$      40.00	0.3682	$   14.73
20	$      40.00	0.3493	$   13.97
20	$1,000.00	0.3493	$ 349.29
Price Today	$ 831.30