Value of Bond =
Where r is the discounting rate of a compounding period i.e. 8.26%/ 2 = 4.13%
EAR = (1+Nominal Rate / 2 )^2 -1
0.0843 = (1+r/2)^2 -1
1.0843^1/2 = (1+r/2)
1+r/2 = 1.04129726783
r = 8.26%
And n is the no of Compounding periods 30 years * 2 = 60
Coupon 10% /2 = 5%
=
= 1103.8791787 + 88.19579839
= $1192.07
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