Answer:
a. The bond Price = $1,050.37
b. The bond Price = $927.29
Explanation:
Missing question: <em>a. 6.50% b. 11.30%</em>
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A. Face value = 1,000
Coupon rate = (8+3/8)% = 8.375%
Years = 2
PMT = 1000*8.375% / 2 = 41.88
No of years to maturity = 3
Number of compounding period = 6
Market rate of return = 6.50%
Market rate of return per period = 6.50%/2 = 3.25%
The bond Price = PV(Rate, Nper, PMT, FV)*-1
The bond Price = PV(3.25%, 6, 41.88, 1000)*-1
The bond Price = $1,050.37
B. Face value = 1,000
Coupon rate = (8+3/8)% = 8.375%
Years = 2
PMT = 1000*8.375% / 2 = 41.88
No of years to maturity = 3
Number of compounding period = 6
Market rate of return = 11.30%
Market rate of return per period = 6.50%/2 = 5.65%
The bond Price = PV(Rate, Nper, PMT, FV)*-1
The bond Price = PV(5.65%, 6, 41.88, 1000)*-1
The bond Price = $927.29
