Question

unanswered not submitted Assume a par value of $1,000. Caspian Sea plans to issue a 17.00 year, semi-annual pay bond that has a coupon rate of 8.09%. If the yield to maturity for the bond is 7.72%, what will the price of the bond be? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not submitted Assume a par value of $1,000. Caspian Sea plans to issue a 16.00 year, semi-annual pay bond that has a coupon rate of 7.89%. If the yield to maturity for the bond is 8.37%, what will the price of the bond be? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not submitted

Answer 1

Part 4:
Par value=$1000
Coupon rate=8.09%
As the coupon payment is made semiannually, the semiannual rate is 8.09%/2=0.04045
Coupon payment=(Semiannual coupon rate)*(Par value)=0.04045*1000=40.45
Semiannual yield to maturity=7.72%/2=0.0386
Time period=17
As the coupon payment is made semiannually, the number of periods=17*2=34

1 Par value 1000 2 Coupon payment 40.45 3 Yield to maturity 0.0386 Number of periods 34 4 5 Present value ($1,034.70) 6 Formula used: PV(S3,S4,S2,S1)

So, the present value of the bond is $1,034.70

Part 5:
Par value=$1000
Coupon rate=7.89%
As the coupon payment is made semiannually, the semiannual rate is 7.89%/2=0.03945
Coupon payment=(Semiannual coupon rate)*(Par value)=0.03945*1000=39.45
Semiannual yield to maturity=8.37%/2=0.04185
Time period=16
As the coupon payment is made semiannually, the number of periods=16*2=32

R 1 Par value 1000 2 Coupon payment 39.45 3 Yield to maturity 0.04185 Number of periods 32 4 ($958.10) 5 Present value= 6 Formula used: PV(S3,S4,S2,S1)

So, the present value of the bond is $958.10