Homework Answers
The price that we should pay is computed as shown below:
The coupon payment is computed as follows:
= Coupon rate x Par value
= 10% x $ 1,000
= $ 100
So, the price of the bond will be:
= $ 100 / 1.121 + $ 100 / 1.122 + $ 100 / 1.123 + $ 100 / 1.124 + $ 100 / 1.125 + $ 1,000 / 1.125
= $ 927.90 Approximately
Feel free to ask in case of any query relating to this question
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