Help! Bond Question!

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Hello Everyone,

So I am new to investing and am in a basic investment class. We're working on Bonds right now, and I am having trouble with a question. It is:

A 5 year bond with a face value of $5,000 with a 4.5% coupon, makes semi
annual coupon payments, and has a discount rate per year of 4.3%. What is
price of this bond?

I don't get how I am supposed to calculate this? Do I use the discount rate to get the present value of the bond based on the $5,000 face value? Does this lead me to the yield to maturity?

Help! I would really, really appreciate it!

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no

No what?

At least you are admitting it is for a class.

Use your calculator's PV, PMT, FV N, and I functions to solve for PV. Or discount all future cash flows back to present value to get the price of the bond.

Yeah, my professor said we can seek outside help if need be. He just said we are supposed to make an attempt first, and I have been trying. I have been using the excel functions (PV, PMT, FV, etc.) but none of them seem to be giving me the answer or are asking me for inputs that I do not have.

I did get to $5,044.56, but I am not certain if that is correct or not.

Answer is >$5000

Excel is your friend, use =PV(0.043/2,5*2,(5000*0.045)/2,5000)

First field is discount rate (divide by 2 for semiannual), second is number of payments (5 years * 2 for semiannual), Coupon payment is field 3 (bond price * coupon rate / 2 for semi annual, last field is face value

Result is $5044.56, which makes sense because the discount rate is slightly below the coupon yield. Yields fell slightly so the bond price rose slightly.

This is a university course assignment. You should read your textbook. There are solved examples showing you how to work these problems.

I understand you can ask for help wherever, but FWF isn't a place that's best suited for it. If you can't find it in a textbook, google is your friend.

Is it "ask a homework question" day today?

why not email your professor asking for a hint? that is what I do when I get stuck and normally they are glad to help

I keep clicking on this post thinking it has something to do with Sean Connery or Daniel Craig or Skyfall!

Yeah, this really isn't the place to ask this. Aren't there some classmates that could help? College age, female, good loo---uh, I mean, uh, what were you asking again?



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