Compute the price of a 5.9 percent coupon bond with fifteen years left to maturi

Question

Compute the price of a 5.9 percent coupon bond with fifteen years left to maturity and a market interest rate of 7.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Compute the price of a 5.9 percent coupon bond with fifteen years left to maturity and a market interest rate of 7.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Explanation / Answer

Coupon payment =5.9%*1000/2=29.5

Price = 29.5/(1+7%/2)+ 29.5/(1+7%/2)^2 + 29.5/(1+7%/2)^3 .....1029.5/(1+7%/2)^30 =$898.84

Discount bond

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