A 7.5%, 9-year bond sells for how much if it has a 10% yield?

Question

Question

Answer 1

Answer #1

price of coupon = Coupon payment per period * [1-(1+i)^-n]/i + par value/(1+i)^n

i = interest rate per period

n = number of periods

Price = 75 * [1-(1+0.1)^-9]/0.1 + 1000/(1+0.1)^9

= 856.02

Answer 2

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