Answer:
Bond Price= $600
Explanation:
Giving the following information:
Face value= $1,000
Number of periods= 16*2= 32
Cupon= (0.07/2)*1,000= $35
YTM= 0.13/2 = 0.065
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 35*{[1 - (1.065^-32)] / 0.065} + [1,000/(1.065^32)
Bond Price= 466.69 + 133.29
Bond Price= $600
