A year ago, Co. sold 17yr bonds. The coupon rate is7.8%. Face value is $1,000. They're...

A year ago, Co. sold 17yr bonds. The coupon rate is7.8%. Face value is $1,000. They're semiannual payments.

Required:

The YTM is 5.5%, what's the price? Hint: don't forget to adjust the maturity for it being a year later, so the NPER has declined by two semi-annual periods. Once again, for all the semi-annual problems divide the coupon rate and YTM by 2, and multiply NPER by 2. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current bond price

Solutions

Expert Solution

Price of Bond = PV of Cfs from it.

Particulars	Amount
Coupon Amount	$ 39.00
Maturity Value	$ 1,000.00
Disc Rate	2.750%
Starting	1
Ending on	32

Period	Cash Flow	PVF/ PVAF @2.75 %	Disc CF
'1 - 32	$ 39.00	21.1003	$ 822.91
'32	$ 1,000.00	0.4197	$ 419.74
Bond Price			$ 1,242.65

PVAF = Sum [ PVF(r%, n) ]
PVF = 1 / ( 1 + r)^n
Where r is int rate per Period
Where n is No. of Periods

PVAF using Excel:
+PV(Rate,NPER,-1)
Rate = Disc rate
Nper = No. of Periods

Pls comment, if any further assistance is required,

jeff jeffy answered 1 year ago

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