A 10-year Emmaco Corporate bond has a par value of $10,000 with coupons at 7.8% paid semiannually.

Question:

(a) If this bond is bought to yield 10% compounded semiannually, find its price.

(b) Suppose that after this bond has been held for 2 years, the desired yield is 8% compounded semiannually. Find the selling price.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...