18.

You just purchased a 11 year, 6.9% semi-annual coupon bond, with a face value of $1000, for $918.81. The first coupon will be paid to you in 6 months. You expect to hold the bond for 30 months, and then sell the bond immediately after collecting the 5^th semi-annual coupon payment. At the time the bond is sold, the YTM of the bond (expressed as an EAR) is expected to be 5.9%.

If true, then what do you expect the price of the bond to be when you sell it in 30 months?

Enter your answer in dollars and cents.

HINT: Remember that after 30 months have passed, the bond will have a shorter remaining life than when you initially purchased it. Youll need to take this into account when you determine the price of the bond at the time you sell it.

HINT #2: Remember, because the coupon payments occur every 6 months, youll need to use an effective 6 month rate in the Big Ugly equation, and therefore youll have to convert the EAR-measured YTM (given) into an effective 6 month rate.