Answer:
The price of the bond is $2,321.30
Explanation:
In this question, we are concerned with calculating the price of the bond.
We can calculate this mathematically by using the formula below;
Price of bond = P ÷ (1 + r/n)^nt
where P = par value of coupon bond = 10,000
r is the interest rate = 5.1% = 5.1/100 = 0.051
n = number of times yield to maturity is compounded. Since it is semi-annually, it means it is twice per year and thus, n = 2
t is the number of years to maturity = 29 years
Plugging these values into the equation above, we have
Price of bond = 10,000 ÷ (1 + 0.051/2)^(2)(29)
Price of bond = 10,000 ÷ (1.0255)^58
Price of bond = $2,321.30
