How to calculate this bond value?
Hey all,
I've got a Question and it's about the Value of a bond. Here is the question:
Company issued a 15 year bond, 3 months ago. This bond pays a semiannual coupon at a coupon rate of 11% p.a.
The rate of return (discount rate) = 10% p.a.
The Face Value is 100,000$
Question: What is today's price of the bond?
Now I know that since it pays semi annually we have to divide the coupon rate and discount rate by 2.
So we have 5.5% and 5% respectively.
My first instinct was to simply put it into the formula for an Ordinary Annuity and also add the discounted face value at the end:
Price of bond = (5,500 / 0.05)*(1(1/(1+0.05)^30)) + (100,000 / ((1+0.05)^30))
= 107,686.23
However, this would be the price of the bond if it were emitted today.
Instead, it was emitted 3 months ago, so we have to discount it 3 months less.
So I can get todays value (3 months later) by:
107,686.23 * (1+0.05^0.5) = 110,345.55
(is the ^0.5 correct here? Because the 5% is for half a year, so ^0.5 should make it for a quarter year, aka 3 months)
This is the solution I came up with. However, if I enter the coupon details into the following website:
https://exploringfinance.com/bondpricecalculator/
The result is: 107,629.087
(For Term to maturity I used 14,75 years)
So which is correct? Neither?
 unanswered
 93 views
 Pro Bono
Related Questions
 Black Scholes Calculation

Mathematical finance question on Portfolio
and Investment Year Methods(question attached below)  Internal Rate of Return vs Discount Rate
 Optimal Control  Calculus of Variations
 Contract Crediting Rate Formula
 Finding Probability Density Function of a Standard Brownian motion: Conditioning for two different cases
 Disecting Constant Product formula
 Amortization Table
Questions at this level should come with a good bounty.