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Assume a bond with a par value (value upon maturity) of $2,400, a Coupon Rate of...

Assume a bond with a par value (value upon maturity) of $2,400, a Coupon Rate of 6%, and a maturity period of 3 years. Suppose, furthermore, semiannual coupon payments and compounding at a market interest rate of 9%. Please compute the market price of this bond or the present value of the stream of semiannual cash flows.

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Answer #1

Market price of the bond=Present value of semi annual cash flows=6%*2400/9%*(1-1/1.045^6)+2400/1.045^6=2214.32

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