PV of 2nd COUPON of 5% semi-annual pay bond trading at 92

Pk86

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Feb 25, 2017
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I wrote an exam last week and saw an almost identical questions like this on it. I couldn't figure it out for the life of me and still can't

The problem read

What is the present value of the SECOND COUPON of a 5% semi-annual pay bond trading at 92, assuming a discount rate of 7%.
(Base your answers on $1,000 face.)

a) $21.47
b) $21.84
c) $23.34
d) $43.67

I did this on my calculator by plugging in the following
FV - 1000
PMT - 92x .05/2 = 4.60
PV - ?
I/Y - 7% / 2 = 3.5
N - ?


Where am I going wrong? I know the answer is 23.34, but I don't know how to calculate it.
 
From the work you're showing,
you are not ready for this.
Or you need to trade in your teacher :rolleyes:

Hint:
Coupon amount = $25
25 / 1.035^2 = ?

I actually ended up figuring it out shortly after. Thanks.
 
Please could you show your workings. Please.
Thank you.
I doubt the original poster is going to answer because this post was made 19 months ago.

Let's try this. What is the relevant payment? What is the relevant interest rate? What is the relevant time period! Is there anything else you need to know to calculate a present value?
 
Mate i am a novice in this area, that's why i asked for a solution.
Thank you.
 
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