Problem#1

A bond has 6 years Maturity, a 8 % annual coupon and taka 1000 of par value. The YTM
of the bond is 9%. What is its price?

Given,
Maturity (n) =6 years
Principal (M)=1000
Coupon (C) = 8 % annual coupon
the Coupon per annum=8% of 1000= 80
YTM (i)=9% or .09

1
1−(1+𝑖)n 𝑀
Bond price= c + (1+𝑖)n
𝑖
1−(1+𝑖)−𝑛
=c + 𝑀 ∗ (1 + 𝑖)−𝑛
𝑖

Therefore, the price of bond will be

1−(1+.09)−6
P=80* + 1000 ∗ (1 + .09)−6
.09
1−(1.09)−6
=80* .09
+ 1000 ∗ (1.09)−6
0.403732673120784
=80* + 1000 ∗ 0.596267326879216
.09

=80*4.485918590230933333+596.267326879216
=358.87348721847466664+ 596.267326879216
=955.14081409769066664
=955.1408
 1) Problem#2
A bond has 18 years Maturity, a 10 % annual coupon and taka 1000 of par value.
The YTM of the bond is 7%. What is its price?

Given,
Maturity (n) =18 years
Principal (M)=1000
Coupon (C) = 10 % annual coupon
the Coupon per annum=10% of 1000= 100
YTM (i)=7% or .07
1
1−(1+𝑖)n 𝑀
Bond price= c + (1+𝑖)n
𝑖
1−(1+𝑖)−𝑛
=c + 𝑀 ∗ (1 + 𝑖)−𝑛
𝑖

Therefore, the price of bond will be

1−(1+.07)−18
P=100* + 1000 ∗ (1 + .07)−18
.07
1−(1.07)−18
=100* + 1000 ∗ (1.07)−18
.07
1−0.295863916321598304105
=100* + 1000 ∗ 0.295863916321598304105
.07
0.704136083678401695895
=100* + 1000 ∗ 0.295863916321598304105
.07

=100*10.0590869096914527985+295.863916321598304105
=1005.90869096914527985+295.863916321598304105
=1301.772607290743583955
=1301.7726
Problem#3

$100 par value bond paying coupon of $10 per annum is redeemed at par in 3 years. The
average annual discount rate is 6%. Coupons are paid semi annually, what is the price of this
debt by general floating equation?
Answer:110.56

Problem#4

A bond has a par value of $1000, a coupon rate of 10.75% and matures in 5 years. If
interest is paid annually and the required rate of return is 10%, what is the bond’s value by
general constant rate formula?
Answer:1028.4309

Problem#5

The sh1,000 face value ABC bond has a coupon rate of 6%, with interest paid semi-
annually, and matures in 5 years. If the bond is priced to yield 8%, what is the bond's value
today?