Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 9.6 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Is this a discount or premium bond?premium bonddiscount bond

Question

Asked Nov 2, 2019

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Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 9.6 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Is this a discount or premium bond?

premium bond
discount bond

Expert Answer

Step 1

Calculation of bond price:

The price of the bond is $709.01.

Assume the par value of the bond as $1,000.

...

Image Transcription
А В 1 Coupon rate 2 Number of years 2.95% 30 3 Interest rate 4.80% 4 Par value ($1,000) ($30) $709.01 5 PMT 6 Bond price

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