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Olegator [25]
3 years ago
9

A three-year bond has an 8.0 percent coupon rate and a $1,000 face value. If the yield to maturity on the bond is 10 percent, ca

lculate the price of the bond assuming that the bond makes semiannual coupon payments.
Business
1 answer:
Anuta_ua [19.1K]3 years ago
4 0

Answer:

$949.24.

Explanation:

The price of the bond also known as the Present Value (PV) of the Bond CAN be calculated using a Financial Calculator as

FV = $1,000

I/yr = 10%

Pmt = ($1,000 x 8.0 %) / 2 = $40

N = 3 x 2 = 6

P/yr = 2

PV = ???

Inputting the data in a Financial Calculator gives a Present Value of $949.24. Thus the price of the bond is $949.24.

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