"Calculate the price of a 2.80% coupon bond that matures in 18 years if the market...

"Calculate the price of a 2.80% coupon bond that matures in 18 years if the market interest rate is 4.05% (Assume semiannual compounding and $1,000 par value)."

Solutions

Expert Solution

Semiannual interest = $1,000 * 0.0280 * 6/12 = $14

Current bond price = $14(PVIFA 2.025%,36) + $1,000(PVIF 2.025%,36)

Current bond price = ($14 * 25.3868047176) + ($1,000 * 0.48591720426)

Current bond price = $841.33

jeff jeffy answered 2 years ago

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