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Calculating Value of Bond

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Calculating Value of Bond
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Calculating Value of Bond

  1. 1. Calculationwww.findinguniversity.com
  2. 2. Formula for Value of Bond 1 1- 1 ) ( ) nVB = CP ( (1+i) i + PV (1+i) n Question: ABC corp. offers a 7% coupon bond with annual payments. The yield to maturity is 5.85% and the maturity date is 9 years. What is the market price of a $1,000 face value bond? www.findinguniversity.com
  3. 3. CP = 1000 x 7% i = 0.0585 n=9 PV = 1000 = 70 1 ( ) 1- 1 ((1+0.0585) ) 9VB = 70 (1+0.0585) + 1000 9 0.0585 = 479.24 + 599.5 = 1078.74 www.findinguniversity.com

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