A bond has a face value of $100,000. A coupon rate of 3.75%.a YTM of 3.46%, and it matures exactly 20 years from today. 

What is its price if the next coupon payment is scheduled to be made six months from today?

Answer rating: 100% (QA)

To calculate the price of the bond we need to determine the present value of both the coupon payments and the face value First lets calculate the present value of the coupon payments The bond has a face value of 100000 and a coupon rate of 375 Since coupon payments are made semiannually there will be 40 coupon payments over the bonds 20year period To find the present value of the coupon payments we can use the formula for the present value of an annuity PV C 1 1 rn r where PV is the present value C is the coupon payment ... View the full answer