Based on the period of the bond, the coupon rate, and the yield to maturity, the price of the bond is $1,017.83.
How much does the bond sell for?
This can be found as:
= Present value of coupon payments + Present value of par value
Coupon is:
= 9% x 1,000 par value
= $90
Note: When par value is not given, assume it is $1,000.
Price is:
= (90 / (1 + 8%)) + (90 / (1 + 8%)²) + (1,000 / (1 + 8%)²)
= 160.4938 + 857.3388
= $1,017.83
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