## Solution Library

# Calculate Price Of Bond With Coupon Interest Rate Given

**Question**

Consider a bond with a par value of $1,000 that will mature in 10 years. You are given that

the investors’ required rate of return is 5% per annum.

(a) Calculate the price of the bond to the nearest cent if the coupon interest rate is 6% per annum, paid annually.

(b) Calculate the price of the bond to the nearest cent if the coupon interest rate is 6% per annum, paid half-yearly.

(c) Explain why the answers to parts (a) and (b) must be more than the par value of the bond.

**Summary**

The question belongs to Finance and it discusses about calculation of price of bond with coupon interest rate given and paid annually and half-yearly.

**Total Word Count 152**

## Comments

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