A bond is available for purchase that has a face value of $ 2000, a 6.50% coupon payable semiannually, and 10 years of its original 30 years left of maturity. Approximately how much would you pay for the bod if the market return on similar bonds is 9.0 %?

which formula u use

K =Nx2         
BOND PRICE=? [(Semi-annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^(Nx2)
                   k=1

or

BP= semi annual payment x PVIFA (r,n) + (FV x PVIF (r,n)

Request please show the formula and solve step by step.

Answer rating: 100% (QA)

To calculate the price of the bond well use the second formula you provided BP semiannual paym... View the full answer