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Recalculate the price of the bond

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1.Company Locklend Ltd has issued 18.5 years bond to raise capital. If the bond face value is 1000, the interest rate is 3.5% p.a. compounded semi-annually and the coupon rate is 4.5% p.a. Find the price of the bond using both PRICE and PV function. Comment on your results of the two functions.

2. Assume new information is given about yield and coupon rate. If yield reduces by 2% and all other information stay same as in part 2a, recalculate the price of the bond either using the PV or PRICE function. Instead of yield change suppose coupon rate reduces by 2% and all other information stay constant as in part 2a. Recalculate the price of the bond either using the PV or PRICE function. Comment on the results.

Reference no: EM132665965

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