The bond price 101.78
What is the price of a bond?
A bond price is the present value of its future cash flows discounted at the yield to maturity which is the appropriate discount rate.
Specifically, the bond price is the present value of annual coupons for 2 two years and the face value discounted at the 8% yield to maturity.
We can determine the bond price using the present value formula of a single cash flow for all cash flows.
PV=FV/(1+r)^N
FV=future cash flow(annual coupons for 2 years and face value)
annual coupon=face value*coupon rate
face value=100
coupon rate=9%
annual coupon=100*9%
annual coupon=9
r=discount rate=8%
N=year of cash flows, 1 for year 1 and 2 for year 2
bond price=9/(1+8%)^1+9/(1+8%)^2+100/(1+8%)^2
bond price= 101.78
Find out more about bond price on:https://brainly.com/question/25596583
#SPJ1
