I am using this on my financial calculator. So if you could use excel when you solve this with pv and fv that would be really helpful.

I'm having trouble understanding why 789 is the answer.

The inputs are:

1000 fv

71 PMT

10.9 I/Y yield to maturity

9 N (years)

Compute for the PV

I don't understand why I do not include the 1190 price in my calculation

I thought I would need to calculate it this way:

1190 PV

71 PMT

10.9 I/Y

9 N (years)

Then compute for the FV.

Can you please explain why the first way is correct? I have a feeling it may have something to do with it being a premium bond.

Check my work 29 A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 7.1%, and sells for $1,190. Interest is paid annually. a. If the bond has a yield to maturity of 10.9% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your anser to nearest whole number.) Price $ 789 b. What will be the annual rate of return on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Rate of return c. Now assume that interest is paid semiannually. What will be the annual rate of return on the bond? Slightly greater than your part b answer Slightly less than your part b