Final answer:
The price of Intel's 4.8% coupon bond, maturing in 3 years with a YTM of 2.9%, is found by calculating the present value of future cash flows discounted by the YTM. Since the bond's coupon rate is above the YTM, it should sell for above par value. The precise calculation involves using the present value formula for each of the coupon payments and the face value at maturity.
Step-by-step explanation:
The question pertains to calculating the price of a semi-annual, 4.8% coupon bond from Intel that matures in 3 years when the yield-to-maturity (YTM) is 2.9%, and the par value is $1,000. We'll need to use the present value formula to determine the current price of the bond, which involves discounting the future coupon payments and the face value of the bond by the current yield-to-maturity.
The price of a bond is essentially the present value of its projected future cash flows, which are the coupon payments and the final repayment of the par value at maturity. Since these payments occur in the future, they must be discounted back to their present value at the current market interest rate, which is the YTM. For this bond, given that the coupon rate is higher than the YTM, we would expect the bond to sell for more than its face value.
To calculate the present value of the bond, we would add up the present values of all future coupon payments, as well as the present value of the face value that is paid at maturity. However, the exact formula and calculation require a more nuanced approach and are beyond this summary's scope.