Dexter Mills issued 20-year bonds a year ago at a coupon rate of 11

Calculation of price of the bond:

Bond price = Present value of future interest payments + Present value of maturity price

Given coupon rate =11.4% per annum

But bond is paying semiannually so coupon rate semiannually = 11.4%/2 = 5.7%

Yield to maturity = 9.2% p.a.

Yield to maturity semiannually = 9.2%/2 = 4.6%

Bonds were issued a year ago, and these are 20 yr bonds, so no.of years left till maturity (present) = 19 yrs.

Bond is paying semiannually means 2 times a year so no.of periods = 19*2 = 38 periods

In the given question face value is not given so we assume facevalue of the bond as 100, then coupon payment = 100*5.7% = 5.7

Bond price =

5.7*PVAF(4.6%,38periods)+100*PVF(4.6%,38thperiod)

5.7*17.80 + 100*0.181 = 119.56

So current price of the bond is 119.56.