Final answer:
To calculate the price of the bond, use the bond pricing formula. Substituting the given values, the bond price is approximately $113.4460.The correct answer is option d.
Step-by-step explanation:
To calculate the price of the bond, we can use the formula:
Bond Price = (Coupon Payment / (1 + (Yield/2))^n) + (Face Value / (1 + (Yield/2))^n)
Where:
- Coupon Payment is the semi-annual interest payment
- Yield is the yield rate per half-year
- n is the number of semi-annual periods until the bond's maturity
- Face Value is the value of the bond at maturity
Plugging in the given values:
- Coupon Payment = $40 (8% of the $1,000 face value)
- Yield = 2.92% p.a. compounded half-yearly, so the half-year yield rate is 1.46%
- n is the number of half-year periods from 13 April 2018 to the bond's maturity date
- Face Value = $1,000
Using the date calculator, I calculate that there are 27 half-year periods between 13 April 2018 and the bond's maturity on 13 April 2033.
Plugging in these values into the formula, I find that the bond price is approximately $113.4460.