A 5-year bond has a face value of $1,000,matures in 5 years,pays interest semiannually,and has a coupon rate of 6.35 percent.The next interest payment will be paid 2 months from today.What is the dirty price of this bond if the market rate of return is 6.2 percent?

Question

Quizplus · Accepted Answer

Bond value = [(0.0635 × $1,000)/2] × ({1 -1/[1 + (0.062/2)]^5×2}/(0.062/2))+ {$1,000/[1 + (0.062/2)]^5×2} = $1,006.37 11ea5bb7_de34_658c_8724_83e7722d5218_TB1005_00 Dirty price = $1,006.37 + [(0.0635 × $1,000/2)× (4/6)] = $1,027.54

A 5-Year Bond Has a Face Value of $1,000,matures in 5