Exhibit 19.10
Use the Information Below for the Following Problem(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7% coupon, matures in two years, has a yield to maturity of 8%, and a face value of $1,000. Bond B pays an annual 8% coupon, matures in three years, has a yield to maturity of 9%, and a face value of $1,000.
-Refer to Exhibit 19.10.Calculate the price of Bond A.

Question

Quizplus · Accepted Answer

$$P _ { 0 } = \$ 70 \left( \frac { 1 - \frac { 1 } { 1.08 ^ { 2 } } } { .08 } \right) + \frac { \$ 1,000 } { 1.08 ^ { 2 } } = \$ 982.17$$

Exhibit 19.10 Use the Information Below for the Following Problem(S)