Determine the price of a Canadian government bond as of January 1, 2007 with face value F=$1000, YTM of r=5%, a semi annual coupon of 6.375% if the bond matures on December 31, 2011.
i got p= 920.70
with function 1000/(1+0.05/2)^10 + (1000*0.06375/2)/0.05 * [ 1- 1/(1+0.05/2)^10]
however if i follow the formula the mid part should be (1000*0.0675)/0.05 but the answer will be $1060.15 which higher than face value...
which one is right?© BrainMass Inc. brainmass.com October 24, 2018, 10:05 pm ad1c9bdddf
Since the YTM is lower than the face value, the price will be higher than then ...
The solution explains how to determine the price of a bond. The semi annual coupon and bond matures are determined.
Stock Valuation versus Bond Valuation
Why is stock valuation considerably less precise than bond valuation? Can you give at least two reasons. Would it be possible to provide some industry references?
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