1.
Sophea
like viewing FanSlave of FB. Totally, she decided to buy 2 Bonds from FBFS cost
$ 100.00. She can get paid in only 4 times of her coupon ( 1 time = 6 months),
after 4 times, her bond will expire. Her bond discount rate per year is 8%.
Please define each price of her bond
that she will sell sooner !
According
to the formula of Bond Price:
Where :
-
Pb
is bond price or price of bond
-
Pn
is par value = 2 Bonds / 2 = $100.00 / 2
= $ 50.00
-
I
= coupon rate or total return of each coupon = (8 x 100)/100 = 8 /2 =$4.00
-
Y
= yield to maturity = discount rate = 8% = 0.08
-
t
= 1 to n
-
n
= total maturity return of each coupon
o
Payment
is made in 4 times = (6 x 4) = 24 months
= 2 years
o
n
= 2
>>
Pb =[(4/1.08)+(4/(1.08)x(1.08))]+(50/(1.08)x(1.08)) = 50
Finally,
the each of her bond price will be sold in $ 50.00
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