Final answer:
To calculate the value of the bond, we use the concept of present value and discount the future cash flows at the required rate of return.
Step-by-step explanation:
To calculate the value of a bond, we can use the concept of present value. The present value of a bond is found by discounting the future cash flows (interest payments and principal repayment) at the required rate of return. In this case, the bond has a maturity of 9 years and makes monthly interest payments. The required rate of return is 6.07%. So, we need to calculate the present value of the interest payments for the remaining 9 years and add it to the present value of the final principal repayment.
The present value of the interest payments can be calculated using the formula:
PV = C * (1 - (1 + r)^-n) / r
Where PV is the present value, C is the coupon payment, r is the required rate of return per period, and n is the number of periods.
For the final principal repayment at maturity, we simply calculate the present value of $1,000 using the same formula.