How we worked it out
Updated as you change the numbers.
- Price = coupon × (1 − (1 + y)⁻ⁿ) ÷ y + face × (1 + y)⁻ⁿ, with 20 coupons of $25.00 and y = yield ÷ 2.
- = $925.61.
Method and assumptions
A bond’s price is the present value of its remaining coupons and the face value at maturity, discounted at the market yield per coupon period. Yield to maturity is the discount rate that makes that present value equal the price, quoted as an annual rate (per-period rate × coupons per year). This prices on a coupon date; between dates, accrued interest is added.
Questions
What is a 5% 10-year bond worth when yields are 6%?
With semiannual coupons, $925.61 per $1,000 of face value.
Sources
Method and figures checked on . Every worked answer on this page is covered by an automated test. Found a mistake? Tell us.