Question: What is the bond price of a $1,000 face value bond, with an 8% coupon rate paid semi-annually , that has a required return of

What is the bond price of a $1,000 face value bond, with an 8% coupon rate paidsemi-annually, that has a required return of 7.5% if

A.The bond has 16 years maturity?

Calculator Inputs:

SEMI-ANNUAL = 2

FV = $1000

PMT= 1000 X .08 = $80/2 =$40

I/YR= 7.5% / 2 = 3.75%

N= 16 x 2 = 32

PV= $1046.14

B.The bond has 20 years maturity.

C.Calculator Inputs:

D.SEMI-ANNUAL = 2

E.FV = $1000

F.PMT= 1000 X .08 = $80/2 =$40

G.I/YR= 7.5% / 2 = 3.75%

H.N= 20 x 2 = 40

I.PV= $1051.38

C. What is the Duration of the bond with 16 years maturity, given the above information.

Yield to Maturity (YTM) = 7.5%

Duration = (80/1.08) x1 + (80/(1.08)^2 x 2 + 80/(1.10)^3 x 3+ 80/(1.08)^4 x 4+ (80/1.10)^5 x 5 + (80/(1.08)^6 x 6 + 80/(1.08)^7 x 7 +80/(1.08)^8 x 8 + (80/1.10)^9 x 9 +(80/(1.08)^10 x 10 + 80/(1.08)^11 x 11 +80/(1.08)^12 x 12 + 80/(1.10)^13 x 13 +(80/(1.08)^14 x 14 + 80/(1.08)^15 x 15 + 1080/(1.08)^16 x 16 80/(1.08) + 80/(1.08)^2 + 80/(1.08)^3 + 80/(1.08)^4 + (80/1.08)^5 + (80/(1.08)^6 + 80/(1.08)^7 + 80/(1.08)^8 + (80/1.08)^9 + (80/(1.08)^10 + 80/(1.08)^11 + 80/(1.08)^12 + (80/1.08)^13 + (80/(1.08)^14 + 80/(1.08)^15 + 80/(1.08)^16

= 9559.478/ 1000 =9.56

D. What is the Duration of the bond with 20 years maturity, given the above information.

I am looking for the answer for c and d. thanks

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