Question

Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 7.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Answer 1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

Bond Price =∑ [(5.9*1000/200)/(1 + 7/200)^k]     +   1000/(1 + 7/200)^15x2

k=1

Bond Price = 898.84