A 15-year, 12%semiannual coupon bond sells for $1,153.72. find the face value?

Answer 1

To find the face value of the bond, we first need to find the semiannual coupon payment.

The coupon payment can be calculated as follows:
Coupon payment = Face value * Coupon rate / 2
Coupon payment = Face value * 0.12 / 2

Since the bond sells for $1,153.72, we can set up the following equation:
$1,153.72 = Coupon payment * [(1 - (1 + r)^-30) / r] + Face value * (1 + r)^-30

Where r = 0.06 (semiannual interest rate)
Coupon payment = Face value * 0.12 / 2

After calculating, we find that the face value of the bond is $1,000.