Question

Bond prices. Price the bonds from the following table with annual coupon payments.

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$1,000.00	6​%		25	10​%		​?
​$1,000.00	8​%		30	12%		​?
​$5,000.00	12​%		15	11​%		​?
​$1,000.00	7​%		5	6%		​?

a. Find the price for the bond in the following​ table: ​(Round to the nearest​ cent.)

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$1,000.00	6​%		25	10​%		​$_______

b. Find the price for the bond in the following​ table: ​(Round to the nearest​ cent.)

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$1,000.00	8​%		30	12%		​$_________

c. Find the price for the bond in the following​ table: ​(Round to the nearest​ cent.)

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$5,000.00	12%		15	11​%		​$__________

d. Find the price for the bond in the following​ table: (Round to the nearest​ cent.)

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity		Price
​$1,000.00	7​%		5	6%		​$________

Answer 1

a

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =25

Bond Price =∑ [(6*1000/100)/(1 + 10/100)^k]     +   1000/(1 + 10/100)^25

k=1

Bond Price = 636.92

b

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =30

Bond Price =∑ [(8*1000/100)/(1 + 12/100)^k]     +   1000/(1 + 12/100)^30

k=1

Bond Price = 677.79

c

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =15

Bond Price =∑ [(12*5000/100)/(1 + 11/100)^k]     +   5000/(1 + 11/100)^15

k=1

Bond Price = 5359.54

d

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =5

Bond Price =∑ [(7*1000/100)/(1 + 6/100)^k]     +   1000/(1 + 6/100)^5

k=1

Bond Price = 1042.12