question archive issued 11-year bonds a year ago at a coupon rate of 10 percent
issued 11-year bonds a year ago at a coupon rate of 10 percent
Subject:FinancePrice:2.86 Bought7
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issued 11-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.9 percent, what is the current bond price? |
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| K = Nx2 |
| Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2 |
| k=1 |
| K =11x2 |
| Bond Price =∑ [(10*1000/200)/(1 + 5.9/200)^k] + 1000/(1 + 5.9/200)^11x2 |
| k=1 |
| Bond Price = 1328.35 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PMT = Par value * coupon %/coupons per year=1000*10/(2*100) |
| I/Y =5.9/2 |
| N =11*2 |
| FV =1000 |
| CPT PV |
| Using Excel |
| =PV(rate,nper,pmt,FV,type) |
| =PV(5.9/(2*100),2*11,-10*1000/(2*100),-1000,) |
