Question

2 times a year, a corporate bond you own pays a coupon of $78. You bought 6 certificates of this bond when it was first issued at par value. Each of these certificates had cost you exactly $1,000 at that time. The issuer has just paid the latest coupon and the bond still has another 18 years before it matures. Your bond dealer tells you this bond is currently priced to yield 17.93%. What is the total value of your bond certificates?

Answer 1

Par/Face value	1000
Annual coupon	156
semi-annual coupon	78
Present Value = Future value/[(1+(r/m))^mt]
r is the interest rate that is .1793.
m is the compounding period that is 2
mt is the time period.
price of the bond = sum of present values of future cash flows
r/2	0.08965
mt	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30	31	32	33	34	35	36
future cash flow	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	78	1078
present value	71.58262	65.69322	60.28837	55.3282	50.77612	46.59856	42.7647	39.24627	36.01732	33.05403	30.33454	27.83879	25.54838	23.44641	21.51737	19.74705	18.12238	16.63138	15.26304	14.00729	12.85485	11.79723	10.82662	9.935873	9.118408	8.368199	7.679713	7.047871	6.468014	5.935864	5.447496	4.999308	4.587994	4.210521	3.864104	49.01014
sum of present values	875.96
The value of 1 bond certificate is $875.96.
Total value of 6 bond certificates = 6*875.96
Total value of 6 bond certificates = 5255.75.
The total value of your bond certificates is $5255.75.