Question

Suppose that a bond has a face value of ₱ 100,000 and its maturity date is 10 years from now. The coupon rate is 5% payable semi-annually. Find the price of the bond, assuming that the required yield is 4%.

Answer 1

Answer:

Bond Price​= $108,175.71

Step-by-step explanation:

Giving the following information:

Face value= $100,000

Coupon rate= 0.05/2= 0.025

YTM= 0.04/2= 0.02

Time period= 10*2= 20 semesters

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​= 2,500*{[1 - (1.02^-20)] / 0.02} + [100,000/(1.02^20)]

Bond Price​=  40,878.58 + 67,297.13

Bond Price​= $108,175.71

Answer 2

In this exercise we have to use the knowledge of finance to calculate the stipulated value through the percentages, thus we find that:

Bond Price will be  $\ 108,175.71$

From the information given in the text we found that:

• Face value: $\ 100,000$

• Coupon rate: $0.05/2= 0.025$

• YTM: $0.04/2= 0.02$

• Time period: $20 \ semesters$

To calculate the price of the bond, we need to use the following formula:

$Bond\ Price = cupon*{[1 - (1+i)^{-n}] / i} + [face \ value/(1+i)^n]$

So with the formula already informed we will replace the values ​​given in the text find what we want.

$Bond \ Price = 2,500*{[1 - (1.02^{-20})] / 0.02} + [100,000/(1.02^{20})]\\Bond Price= 40,878.58 + 67,297.13\\Bond Price= \ 108,175.71$

See more about finances at: brainly.com/question/10024737