Question

Bond A is a 15 year, 9% semiannual-pay bond priced with a yield of maturity of 8%, while bond B is a 15 year, 7% semiannual-pay bond priced with the same yield to maturity. Given that both bonds have par values of $1,000, what would be the prices of these two bonds?

Answer 1

		Bond A		Bond B
Price		$ 1,086.46		$     913.54
Working:
# 1	Price of Bond A		=	=-pv(rate,nper,pmt,fv)
			=	$ 1,086.46
	rate	yield to maturity			8%*6/12		=	0.04
	nper	number of period			15*12/6		=	30
	pmt	semi annual payment			1000*9%*6/12		=	$       45.00
	fv	Par Value					=	$ 1,000.00
# 2	Price of Bond B		=	=-pv(rate,nper,pmt,fv)
			=	$ 913.54
	rate	yield to maturity			8%*6/12		=	0.04
	nper	number of period			15*12/6		=	30
	pmt	semi annual payment			1000*7%*6/12		=	$       35.00
	fv	Par Value					=	$ 1,000.00