Polycorp Treasury a company in the land of Zanadu is holding a parcel of Zanadu Government Bonds with a face value of $2,000,000. The bonds were issued seven years and nine months ago and still have two years and three months to maturity. They pay a coupon rate of interest of 6.25% pa, with interest being paid semi-annually. Currently the market yield quoted for Zanadu bonds is 4.62% pa. The convention in Zanadu financial markets is that the market yield and coupon rate are quoted as annual nominal rates. What is the current market value of the bonds?

Question

Polycorp Treasury a company in the land of Zanadu is holding a parcel of Zanadu Government Bonds with a face value of $2,000,000.  The bonds were issued seven years and nine months ago and still have two years and three months to maturity.  They pay a coupon rate of interest of 6.25% pa, with interest being paid semi-annually. Currently the market yield quoted for Zanadu bonds is 4.62% pa.  The convention in Zanadu financial markets is that the market yield and coupon rate are quoted as annual nominal rates.  What is the current market value of the bonds?