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Quoted priced of a bond?

  1. Dec 3, 2009 #1
    What is a quoted price of a bond?
    Is it a clean price?

    I think it is the present value of the face value of a bond, am I correct?

    What is the quoted price of a bond that has 4.5 years until maturity? The face value of the bond is $5,000 and it has a coupon rate of 8.1% compounded semi-annually and a yield rate of 8.6% compounded semi-annually.

    Here's what I did:
    Using the formula of PV=FV(1 + i)^-n
    5000(1 + 0.043)^-9
    5000(0.068460682)
    3,423.03

    But given the multiple choice answers I have, I am wrong.
    The choices were: 4908.32, 4888.32, 4898.32, 4998.32 or 4809.32

    I would appreciate any help/insight. Thanks
     
  2. jcsd
  3. Dec 3, 2009 #2

    HallsofIvy

    User Avatar
    Staff Emeritus
    Science Advisor

    0.081 divided by 2 is 0.0405, not 0.043.
    But that still doesn't give any of your multiple choice answers. As to what formula you should use, I can't answer that. That is finance, not mathematics.

     
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