Answer:
Bond Price= $1,156.33
Explanation:
Giving the following information:
Number of periods= 15*2= 30 semesters
Cupon= (0.087/2)*1,000= $43.5
YTM= 0.07/2= 0.035
Par value= $1,000
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= 43.5*{[1 - (1.035^-30) / 0.035]} + [1,000 / (1.035^30)]
Bond Price= 800.05 + 356.28
Bond Price= $1,156.33
