Solution:-
Semi-annual bond dividend = $1,000 x 4% x (1/2) = $20
Number of semi-annual periods till maturity = 2 x 6 = 12
Semi-annual yield = 6% x (1/2) = 3%
Bond price ($) = PV of bond dividend + PV of face value
= 20 x P/A (3%, 12) + 1,000 x P/F(3%, 12)
= 20 x 9.954 + 1,000 x 0.7014
= 199.08 + 701.4
= 900.48
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