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    Bond Value : Solution set

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    $1,000 par value bond outstanding that pays 9 percent annual interest. The current yield to maturity on such bonds in the market is 12 percent. Compute the price of the bonds for these maturity dates:

    30 years
    15 years
    1 year

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    $1,000 par value bond outstanding that pays 9 percent annual
    interest. The current yield to maturity on such bonds in the market is 12 percent.
    Compute the price of the bonds for these maturity dates:
    30 years
    15 years
    1 year

    To calculate the price of the bond we need to calculate / read from tables the values of
    PVIF= Present Value Interest Factor
    PVIFA= Present Value Interest Factor for an Annuity
    Price of bond= PVIF * Redemption value + PVIFA * interest payment per period

    PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%
    PVIF( n, r%)= =1/(1+r%)^n

    No of years to maturity= 30

    Price of bond
    Coupon ...

    Solution Summary

    The solution calculates price of bonds for different maturity dates, given annual interest and the current yield to maturity.

    $2.19

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