An 8% bond with 18 years to maturity has a yield of 9%.What is…
An 8% bond with 18 years to maturity has a yield of 9%.What is the price of this bond?
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Technifi Expert’s Answer:
Let the Present Value of Bond = $100
Coupon rate = 8%
Time = 18 years
Yield to Maturity = 9%
Then, Coupon Interest = $8
=$8 X PVAF(9%,18years) + $100 X PVF(9%,18years)
=$8 X 8.7556 + $100 X 0.211993
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