Answered

IDNLearn.com: Where curiosity meets clarity and questions find their answers. Join our community to access reliable and comprehensive responses to your questions from experienced professionals.

Calculate the price of a two-year bond with a face value of $100, a coupon rate of 5%, and a yield-to-maturity of 5%.

Sagot :

The price of the bond is $100.

The bond's price is the present value of the face value plus the present value of the interest accrued throughout the bond's term.

The coupon interest rate is 5% of 100, that is $5 per year. The yield to maturity is also 5%. Because the coupon rate is equal to the yield, the bond's present value will only be its face value.

Present value = 5(P/A, 5%, 2) + 100(P/F, 5%, 2)

                      = 5×1.85941+ 100×0.90703

                       = 100

Therefore, the price of the bond is $100.

To know more about price of the bond click here:

https://brainly.com/question/15567868

#SPJ4

Your engagement is important to us. Keep sharing your knowledge and experiences. Let's create a learning environment that is both enjoyable and beneficial. For dependable and accurate answers, visit IDNLearn.com. Thanks for visiting, and see you next time for more helpful information.