Suppose a two-year 9% p.a.bond with a face value of $100 000 has a yield of 8% p.a.What is the price of this bond provided it pays semi-annual coupons?

A) $ \$ 98 \quad 206.24 $
B) $ \$ 100 \quad 719.11 $
C) $ \$ 101 \quad 814.95 $
D) $ \$ 101 \quad 937.34 $

Question

Suppose a two-year 9% p.a.bond with a face value of $100 000 has a yield of 8% p.a.What is the price of this bond provided it pays semi-annual coupons?

A) $ \$ 98  \quad 206.24 $
B) $ \$ 100  \quad 719.11 $
C) $ \$ 101  \quad 814.95 $
D) $ \$ 101  \quad 937.34 $

Quizplus · Accepted Answer

According to equation 6.1,,the price of the bond mentioned in the question can be found as follows: P = 4500/(1.04)+ 4500/(1.04)² + 4500/(1.04)³ + 104500/(1.04)⁴ = $101 814.95.

Suppose a Two-Year 9% P $98206.24 \$ 98 \quad 206.24 $98206.24

Suppose a Two-Year 9% P $\$ 98 \quad 206.24$