What is the price (i.e., present value) of a bond that has a time to maturity...

 

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What is the price (i.e., present value) of a bond that has a time to maturity of 3 years, semiannual coupon payments of $64 (i.e., $64 is paid every six months, and there are 3*2 periods), and a face value of $1000, if the yield to maturity is 10.25% effective annual rate (or 10% annual percentage rate; note that 10.25% EAR and 10% APR with semiannual compounding is actually the same rate)? (answer in dollars, but without the dollar sign, e.g. "1242.34" is $1,242.34) What is the price (i.e., present value) of a bond that has a time to maturity of 3 years, semiannual coupon payments of $64 (i.e., $64 is paid every six months, and there are 3*2 periods), and a face value of $1000, if the yield to maturity is 10.25% effective annual rate (or 10% annual percentage rate; note that 10.25% EAR and 10% APR with semiannual compounding is actually the same rate)? (answer in dollars, but without the dollar sign, e.g. "1242.34" is $1,242.34)

Answer rating: 100% (QA)

SOLUTION To calculate the present value of the bond we need to discount each coupon payment and the face value using the yield to maturity Calculate t... View the full answer