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    Price of bond

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    I whish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. I require a 10 percent nominal yield to maturity on this investment, what is the maximum price I should be willing to pay for the bond?

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    Solution Preview

    I wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. I require a 10 percent nominal yield to maturity on this investment, what is the maximum price I should be willing to pay for the bond?
    Maximum price = discounted value of cash inflows

    To calculate the price of the bond we need to calculate / read from tables the ...

    Solution Summary

    The solution calculates the value of a bond.

    $2.19

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