Find the pure price of each citigroup bond

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John is considering acquiring a couple of Citigroup bonds, which were initially offered with a face value of $1000, a coupon rate of 12% per year (paid semiannually), and a maturity of 9 years. However, these bonds already paid 3 coupons and John is planning to buy them now, right before the next coupon payment (hence coupon received at John’s time “zero”). Find the pure price of each Citigroup bond if the current market interest rate for similar financial assets is 7% per year (compounded semiannually).

Reference no: EM132040913

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