Determine the selling price PV, per $1,000 maturity value, of the bond. HINT [See Example 8.] (Assume twice-yearly interest payments. Round your answer to the nearest cent.)
5 year, 4.345% bond, with a yield of 4.485%

Question

Determine the selling price PV, per $1,000 maturity value, of the bond. HINT [See Example 8.] (Assume twice-yearly interest payments. Round your answer to the nearest cent.)
5 year, 4.345% bond, with a yield of 4.485%

tkhunny · Answer

Have you considered calculating the PV of cash flows?

4.345% Coupon gives: $1000 * 0.04345 / 2 = $21.73 semi-annually - do 10 of those at 4.485% annually.

Plus, the Maturity value at 4.485% annually.

abdumu16 · Answer

But webassign says that my answer is wrong

tkhunny · Answer

I can't help you very much if you don't show me how you tackled it.

tkhunny · Answer

If I use $21.73 and 1.04485^½ to discount half years, I get $996.01

Do you have specific rounding rules?

If I use $21.72 and 1 + 0.04485/2 to discount half years, I get $993.83

There is a little wiggle room.  I don't like that simple interest in the yield, but I don't know what your instruction are.