Question

Calculate the market price of a $1,000 face value bond under the following conditions. Assume interest is paid semiannually. Do not round intermediate calculations. Round PVFA and PVF values in intermediate calculations to four decimal places. Round the answers to the nearest cent. Current Market Time Until Maturity Coupon Rate Market Price Rate 12% 15 years 10 % $ 8 5 12 9 25 6 30 14 6

Answer 1

Coupon rate	Term	Current market rate	PVFA	PVF	Market price
12%	15	10%	15.37	0.23	1153.72
8%	5	12%	7.36	0.56	852.80
9%	25	6%	25.73	0.23	1385.95
14%	30	9%	20.64	0.07	1515.95
5%	6	8%	9.39	0.62	859.22

Workings

AutoSave o 9.3HD Book1 - Excel Sign in - 0 X File Home Insert Draw Page Layout Formulas Data Review View Help Tell me what you want to do Share Comments A = = 0 insert şi 49 O -A A = E Paste La- - Percentage 3$ -% to Number Calibri - 11 BIU - B Font - . Delete - Format Conditional Format as Formatting Table - Cell Styles Sort & Find & Filter - Select Editing Clipboard Alignment t o Styles Cells for 8% H E Coupon rate Term Current market rate PVFA PVF Market price 0.12 15 0.1 =(1-1/(1+D2/2)^(C2*2))/(D2/2) =1/(1+D2/2)^(C2*2) =B2*1000*E2/2+1000*F2 0.08 15 0.12 =(1-1/(1+D3/2)^(C3*2))/(D3/2) =1/(1+03/2)^(C3*2) =B3* 1000*E3/2+1000*F3 0.09 25 0.06 -(1-1/(1+04/2)^(C4*2))/(04/2) =1/(1+D4/2)^(C4*2) =B4*1000*E4/2+1000*F4 0.14 300.09 =(1-1/(1+D5/2)^(C5*2))/(D5/2) =1/(1+D5/2)^(C5*2) =B5*1000*E5/2+1000*F5 0.05 6 0.08 =(1-1/(1+06/2)^(C6*2))/(D6/2) =1/(1+06/2)^(C6*2) =B6*1000*E6/2+1000* F6 Sheet1 Sheet4 Sheet2 Sheet3 © Ready + 100% E 2 AD -- - ENG 12:21 AM 0