question archive What is the purchase price of a bond that has 5 years and 6 months until it matures? The face value of the bond is $3000 and the coupon rate is 5
What is the purchase price of a bond that has 5 years and 6 months until it matures? The face value of the bond is $3000 and the coupon rate is 5
Subject:FinancePrice:2.86 Bought3
What is the purchase price of a bond that has 5 years and 6 months until it matures? The face value of the bond is $3000 and the coupon rate is 5.2% compounded semi-annually. The yield rate is 7.5% compounded semi-annually. *
2 440.53
2 547.53
2 447.53
2 693.65
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PMT = coupon payment = 3000 x 0.052 / 2 = 78
n = number of periods = 5.5 x 2 = 11
rate = periodic rate = 0.075/2 = 0.0375
FV = face value = 3000
PV = [PMT x (1-(1+rate)-n) / rate] + [FV / (1+rate)n]
PV = [78 x (1-(1+0.0375)-11) / 0.0375] + [3000 / (1+0.0375)11]
PV = 2693.65
