You are interested in purchasing a bond that has a face value of $1,000 The bond will mature in 20 years and will pay the following coupons During the first five years, no coupons will be paid During the subsequent 10 years, coupons will be paid semi annually at the end of each period Coupon rate will be 1 00 per year compounded semi annually During the last five years, coupons will be paid semi annually at the end of each period Coupon rate will be 3 00 per year compounded semi annually Calculate the current price of the bond, assuming that the yield to maturity remains at 2 50 per year compounded semi annually throughout the entire 20 year period Show your calculation

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Question: You are interested in purchasing a bond that has a face value of $1,000. The bond will mature in 20 years and will pay the

You are interested in purchasing a bond that has a face value of $1,000. The bond will mature in 20 years and will pay the following coupons:

During the first five years, no coupons will be paid
During the subsequent 10 years, coupons will be paid semi-annually at the end of each period. Coupon rate will be 1.00% per year compounded semi-annually
During the last five years, coupons will be paid semi-annually at the end of each period. Coupon rate will be 3.00% per year compounded semi-annually

Calculate the current price of the bond, assuming that the yield to maturity remains at 2.50% per year compounded semi-annually throughout the entire 20-year period. Show your calculation.

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