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What is the price of a 12 year bond paying semiannual interest at a rate of 9.5% with a yield to maturity of 9.75%?  Assume par is $1,000.

Question

What is the price of a 12 year bond paying semiannual interest at a rate of 9.5% with a yield to maturity of 9.75%?  Assume par is $1,000.

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Step 1

Par Value of Bond = $1,000

Interest Rate = 9.5%

Type of Interest = Semi-annual

 

Calculation of semi-annual interest payment:

Semi-Annual Interest = Par Value of Bond x Interest Rate
2
- $1,0009.5%
2
=$1,000 x 4.75%
= $47.5
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Semi-Annual Interest = Par Value of Bond x Interest Rate 2 - $1,0009.5% 2 =$1,000 x 4.75% = $47.5

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Step 2

Par Value of Bond (fv) = $1,000

Semi-annual Interest (pmt) = $47.5

Time Period = 12 years

Number of Payments per year = 2

Time to Maturity (nper) = 24

Yield to Maturity (rate) = 9.75%

&nbs...

|=PV¢
PV(rate, nper, pmt, [fv], [type])
|=PV(9.75%/2,24,47.5,1000)
(S982.54)
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Image Transcriptionclose

|=PV¢ PV(rate, nper, pmt, [fv], [type]) |=PV(9.75%/2,24,47.5,1000) (S982.54)

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