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Hi, Could someone help me with this problem?
Hi,
Could someone help me with this problem?
One year ago, an investor bought a 15-year $1,000 face-value bond that has an annual coupon rate of 6%, and interest payments are paid semi-annually. The yield to maturity was 8.3% when the investor bought the bond, but the yield to maturity is 9.2% today.
How much has the price of the bond decreased since the date of purchase?
I tried to find the amount of the first bond and then the second to find the difference but I'm not sure this is the correct way to approach this problem.
N-30
I-8.3/2=
FV- 1000
PMT- 60
Solve PV= 1314.156
N-30 (unsure time that has gone by in problem)
I- 9.2/2=4.6
FV-1000
PMT- 60
Solve PV= 1226.386
1314.156-1226.386=87.770
What am I missing? This doesn't seem correct.
Thank you.