Homework Answers
Coupon Amount = 100*7%*1/2
= $3.5
Value of bond is equal to the present value of all interest payments and principal Amount
Value of Bond = 3.5*PVAF(3%, 14 Periods) + 100*PVF(3%, 14 Periods)
=3.5*11.296 +100*0.661
=$105.65(approx.)
Hence the answer is a.
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