- A coupon bond that pays interest semiannual has par value of $$ 1000$ matures in 8 years, and has yield to maturity of $6 %$ . If the coupon rate is 7 what intrinsic value bond to day ?
- Answers $= 1, 062.81$

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Answer

$1, 062.81$

Steps

Step 1 ：Calculate the semiannual coupon rate: $0.07 / 2 = 0.035$

Step 2 ：Calculate the semiannual yield to maturity: $0.06 / 2 = 0.03$

Step 3 ：Calculate the number of periods: $8 * 2 = 16$

Step 4 ：Calculate the coupon payment: $1000 * 0.035 = 35$

Step 5 ：Calculate the present value of the bond: $P V = 35 * (1 - (1 + 0.03)^{- 16}) / 0.03 + 1000 * (1 + 0.03)^{- 16}$

Step 6 ： $P V = 1062.805510129981$

Step 7 ： $1, 062.81$