A two year bond has par value of $1000 and a 6% coupon rate that is paid semiannually. If the appropriate discount rate is 7%, what should be the price of this bond as a percentage of par value?

98.16%

Step-by-step explanation:

We use the present value function for this question that is reflected on the attachment

Data provided in the question

Future value = $1,000

Rate of interest = 7%  ÷ 2 = 3.5%

NPER = 2 years  × 2 = 4 years

PMT = ($1,000 × 6%) ÷ 2 = $30

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value of the bond is $981.63

Now the percentage is

= ($981.63 ÷ $1,000) × 100

= 98.16%