EQuestion Help (Related to Checkpoint 9.4) (Bond valuation) A bond that matures

Question

EQuestion Help (Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 14 years has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be s (Round to the nearest cent) b. The value of this bond if it paid interest semiannually would be S (Round to the nearest cent) ng Enter your answer in each of the answer boxes

Explanation / Answer

FV = 1000, N = 14, PMT = 90, rate = 15%

use PV function in Excel

value of bond with annual payments = 656.53

FV = 1000, N = 28, PMT = 45, rate = 7.5%

use PV function in Excel

value of bond with semi annual payments = 652.80

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