Answer:
Bond Price= 913.95
Explanation:
Giving the following information:
Face value= $1,000
Cupon= (0.065/2)*1,000= 32.5
YTM= 0.0665/2= 0,03325
Time period= 19*2= 38
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= 32.5*{[1 - (1.03325^-38)] / 0.03325} + [1,000/(1.03325^38)]
Bond Price= 625.42 + ^288.53
Bond Price= 913.95
