You are currently holding a corporate bond. It has a remaininglife of exactly 25 years till maturity. It has a coupon rate of 4.5%(nominal rate compounded semi-annually) and a face value of $1,000.Currently the market is demanding a nominal rate of 6% compoundedsemi-annually on bonds with similar risk and maturity date. A)If you are thinking of selling the bond today, what is the

The current value of the Bond is $807.03

Explanation:

The price of the bond can be calculated by taking the present values of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond.

According to the given data

Face value of the bond = F = $1,000

Coupon payment = C = $1,000 x 4.5% x 6/12 = $22.5 Semiannually

Number of periods = n = 25 years x 2 = 50 period s

YTM = 6% / 2 = 3%

Price of the bond is calculated by using following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Placing all the available values in the  formula

Price of the Bond = $22.5 x [ ( 1 - ( 1 + 3% )^-50 ) / 3% ] + [ $1,000 / ( 1 + 3% )^50 ]

Price of the Bond = $578.92 + $228.11

Price of the Bond = $807.03

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.

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