question archive Calculate the current market price (to the nearest) of bond having par value of $1,000, having a semi-annual coupon rate of 12%, maturity of 12 years and current yield of 15
Calculate the current market price (to the nearest) of bond having par value of $1,000, having a semi-annual coupon rate of 12%, maturity of 12 years and current yield of 15
Subject:FinancePrice:2.86 Bought3
Calculate the current market price (to the nearest) of bond having par value of $1,000, having a semi-annual coupon rate of 12%, maturity of 12 years and current yield of 15.50%.
Select one:
A. $911.84
B. $711.84
C. $811.84
D. $1,011.84
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| K = Nx2 |
| Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2 |
| k=1 |
| K =12x2 |
| Bond Price =∑ [(12*1000/200)/(1 + 15.5/200)^k] + 1000/(1 + 15.5/200)^12x2 |
| k=1 |
| Bond Price = 811.84 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PMT = Par value * coupon %/coupons per year=1000*12/(2*100) |
| I/Y =15.5/2 |
| N =12*2 |
| FV =1000 |
| CPT PV |
| Using Excel |
| =PV(rate,nper,pmt,FV,type) |
| =PV(15.5/(2*100),2*12,-12*1000/(2*100),-1000,) |
