I understand coupon rates and YTM, but am having difficulty with determining how to find todays price of bonds. I am missing something.
Problem: Investor has 2 bonds that mature in 4 years, both with face value at $1000 with YTM=9.6%. Bond 1 has annual coupon=10%. Bond 2 is zero coupon. If YTM remains 9.6 for 4 years how do I find price today of each bond?
The price of the bonds will be the present value of the interest and principal. The discounting rate is the YTM.
The annual interest is 1,000X10%=$100
Principal amount is $1,000
The solution explains how to calculate the price of a bond.