Question

JJ Markets has 8 percent coupon bonds outstanding that mature in 11 years. The bonds pay interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 9 percent?

Answer 1

Price of Bond = PV of CFs from it.

Period	CF	[email protected]%	Disc CF
1	$      40.00	0.9569	$   38.28
2	$      40.00	0.9157	$   36.63
3	$      40.00	0.8763	$   35.05
4	$      40.00	0.8386	$   33.54
5	$      40.00	0.8025	$   32.10
6	$      40.00	0.7679	$   30.72
7	$      40.00	0.7348	$   29.39
8	$      40.00	0.7032	$   28.13
9	$      40.00	0.6729	$   26.92
10	$      40.00	0.6439	$   25.76
11	$      40.00	0.6162	$   24.65
12	$      40.00	0.5897	$   23.59
13	$      40.00	0.5643	$   22.57
14	$      40.00	0.5400	$   21.60
15	$      40.00	0.5167	$   20.67
16	$      40.00	0.4945	$   19.78
17	$      40.00	0.4732	$   18.93
18	$      40.00	0.4528	$   18.11
19	$      40.00	0.4333	$   17.33
20	$      40.00	0.4146	$   16.59
21	$      40.00	0.3968	$   15.87
22	$      40.00	0.3797	$   15.19
22	$ 1,000.00	0.3797	$ 379.70
Price of Bond			$ 931.08

Pls comment, if any further assistance is required.