Question

The yield to maturity of a $1,000 bond with a 7.4% coupon rate, semiannual coupons, and two years to maturity is 8.9% APR, compounded semiannually. What is its price? The price of the bond is $ . (Round to the nearest cent.)

Answer 1

COUPON RATE 7.40% YEAR TO MATURITY 2.00 NPER 4 (years to maturity x 2) PMT 37 (face value x coupon rate)/2 FACE VALUE 1000 YIELD 8.90% RATE = YIELD/2 = 4.45% PRICE = PV = $973.06 -PV(rate,nper,pmt,fv) -pv(4.45%,4,37,1000)

YIELD = RATE = 5.90% NPER = YEARS TO MATURITY FACE VALUE $ 1,000.00 PRICE = PV = $ 901.23 PMT = annual coupon payment $35.62 pmt(rate, nper,-pv,fv) pmt(5.90%,5,-901.23,1000) COUPON RATE = PMT/FACE VALUE 3.562% [ 35.62/1000]