A coupon bond that pays interest semiannually has a par value of $1000, matures in 9...

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business finance

Answer 1

Answer #1

Price of a bond is mathematically represented as: 1 1-- (1 + i) PEC. - +- м. (1 + i) where P is price of bond, with periodi

M = $1000, n = 9 * 2 = 18 semi-annual periods, C = 7% * $1000/2 = $35 (semi-annually), i = 6%/2 = 3% (semi-annually)

1- P = 35 * = (1+0.03) 18 0.03 1000 T (1+0.03)18

P = $481.37 + $587.39

P = $1,068.77

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Answer 2

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