# Semiannual compounding facevalue - Finance Bond Valuation

Document Sample

```					              Sub: Finance                                                                            Topic: Bond Valuation

Question:
Computation of current price of the bond

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You intend to purchase a 10-year, \$1,000 face value bond that pays interest of \$60 every 6
months. Its yield to maturity is 10 percent with semiannual compounding. What is the price of
the bond?

Solution:
Face value of the Bond                      \$1,000
No of Years                                     10
No of half years                                20
Interest every half year                       \$60
Yield to maturity                             10%

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Description: Computation of current price of the bond : You intend to purchase a 10-year, \$1,000 face value bond that pays interest of \$60 every 6 months. Its yield to maturity is 10 percent with semiannual compounding. What is the price of the bond?
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