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A 10 year bond is redeemable at par of 100,000. The bond has semi-annual coupons of 4000. The bond is bought to yield 6% convertible semi-annually. Four months after purchase, calculate the market price based on the theoretical method less the market price based on the semi-theoretical method.

Respuesta :

Answer:

$117,544.14

Explanation:

Current Price of bond is $114,877.47.

Accrued interest for 4 month = $4,000 × (4 / 6)

= $2,666.67

Price of bond after 4 month of purchase = $114,877.47 + $2,666.67

= $117,544.14.

Price of bond after 4 month of purchase will be $117,544.14.

The picture attached shows how to get the current price of bond on excel.

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