Assume that you wish to purchase a bond with a 30-year maturity, an annual coupon rate of 10 percent, a face value of $1,000, and semiannual interest payments. if you require a 9 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

present value of the bond discounted at 9% $1,103.19

Explanation:

We will calcualte the present value of the coupon payment and the maturity of the bonds a t the 9% market rate to know the present value of the bonds.

Cuopon payment: 1,000 x 10% /2 = $50 per payment

time 30 years x 2 payment per year = 60

rate9% annual /2 = 4.5% semiannual = 0.045

PV$1,031.9011

Maturity   1,000.00

time        60

rate  0.045

PV   71.2890

PV coupon payment$1,031.9011

PV maturity                       $71.2890

Total                          $1,103.1901

answer; the cpi;