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How to do this on a financial calculator step by step please Example 6: Determining the Discount or Premium of a Coupon Bond O Problem:

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Example 6: Determining the Discount or Premium of a Coupon Bond O Problem: . Consider three 30-year bonds with annual coupon payment. One has a 10% coupon rate, one has a 5% coupon rate, and one has a 3% coupon rate. If the YTM of each bond is 5%, what is the price of each bond per $100 face value? Which bond trade at a premium, at a discount, and at par? Solution: 1 P(10% coupon) = 10 1- 100 1.0530 = $176.86 (trades at a premium) 0.05 1.0530 1 P(5% coupon) 1 = 5x 0.05 100 = $100.00 (trades at par) 1.0530 1.0550 1 P(3% coupon) 1 = 3 x 0.05 100 = $69.26 1.0530 (trades at a discount) 1.0530

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