Answer:
Bond Price= $10,762.31
Explanation:
Giving the following information:
Face value= $10,000
Time= 12*2= 24
Cupon= (0.09/2)*10,000= $450
YTM= 0.08/2= 0.04
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= 450*{[1 - (1.04^-24)] / 0.4} + [10,000/(1.04^24)]
Bond Price= 6,861.1 + 3,901.21
Bond Price= $10,762.31
