Calculate the price of a 5.8 percent coupon bond with 10 years left to maturity

Question

Calculate the price of a 5.8 percent coupon bond with 10 years left to maturity and a market interest rate of 4.6 percent Par Value $1000. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Calculate the price of a 5.8 percent coupon bond with 10 years left to maturity and a market interest rate of 4.6 percent Par Value $1000. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Explanation / Answer

Bond price:

= [$29×PVAF(2.3%,20)+$1000×PVF(4.6%,10)]

=$460.74+$637.79

= $1,098.53

Bond is selling at premium.

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