Type the Excel formula for the price of the 5.2 %, $1,000-par, 10-year semi-annual bond when the market yield falls to 4.5 %.
Type the Excel formula for the price of the 5.2 %, $1,000-par, 10-year semi-annual bond when the market yield falls to 4.5 %.
Answer
=-PV(0.045/2,20,26,1000)
1,055.87 — a premium, because the 5.2 % coupon exceeds the 4.5 % the market requires. At 5.2 % the same call returns exactly 1,000.00.
Bigel, Introduction to Financial Analysis (CC BY 4.0) §12.6 — discount/premium frame only; OpenStax Principles of Finance §10.2 — reference only; original bond and prices