Toy World bonds have a face value of $1,000,mature in 12 years,pay interest semiannually,and have a coupon rate of 7.2 percent.The next interest payment will be paid 4 months from today.What is the dirty price of this bond if the market rate of return is 7.4 percent?

Question

Quizplus · Accepted Answer

Bond value = [(0.072 × $1,000)/2] × ({1 - 1/[1 + (0.074/2)]^12×2}/(0.074/2))+ {$1,000/[1 + (0.074/2)]^12×2} = $984.27 11ea6c22_9305_5747_9716_37a868d55277_TB1200_00 Dirty price = $984.27 + [(0.072 × $1,000)/ 2)× (2/6)] = $996.27

Toy World Bonds Have a Face Value of $1,000,mature in 12