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    What is the price of the bond that pays annual interest?

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    A 6-year bond that pays 8% interest semiannually sells at par $1000. Another 6-year bond of equal risk pays 8%interest annually. Both bonds are noncallable and have a face value of $1000. What is the price of the bond that pays annual interest?

    The answer is $992.64.

    How did they get it? Can you please show all work?

    Thanks!!!

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    https://brainmass.com/business/bond-valuation/price-bond-pays-annual-interest-44862

    Solution Preview

    The bond that pays 8% interest semiannually sells at par $1000
    which means the interest rate of the bond is ...

    Solution Summary

    The price of the bond that pays annual interest is determined.

    $2.49

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