Assume that you are considering the purchase of a 15 year bond with a coupon rat

Question

Assume that you are considering the purchase of a 15 year bond with a coupon rate of 10%. The bond has a par value of $1000 and makes semi-annual interest payments.If you require a 12% nominal yield to maturity on this investment,what is the maximum price you should be willing to pay for the bond? Assume that you are considering the purchase of a 15 year bond with a coupon rate of 10%. The bond has a par value of $1000 and makes semi-annual interest payments.If you require a 12% nominal yield to maturity on this investment,what is the maximum price you should be willing to pay for the bond?

Explanation / Answer

PV(12%/2,15*2,100/2,1000,)

Time 15 years Coupon 10% Coupon amount 100 Yield 12% Coupon payment Semi annual Price 862.35

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