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Suppose you buy a 2 year 5% bond that has a yield to maturity (YTM) of...

Suppose you buy a 2 year 5% bond that has a yield to maturity (YTM) of 6%. What is the price of the bond?

Please show work with the following formula:

P= C[1-1/(1+r)^n/r] + F/(1+r)^n

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Answer #1

6% Amount $ 50 Factor 1.83339 Present value 91.67 Interest $ Principal $ 1,000 0.89000 $ 890.00 Price of the bond $ 981.67

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