Please help with this practice problem.I'm having trouble finding how to get the "4.2124" in the solution. If you can break it down for me, that would be wonderful.C4a. Coupon bond price = (Par x PVIF) + (Coupon x PVIFA)4b. What is the price of a coupon bond that has a par value of $1000, a maturity of 5 years, acoupon rate of 7% and a YTM of 6% ? Price = (1000 x 0.7473) + (70 x 4.2124) = $1042

Here,Par Value of Bond is $1,000Time to Maturity is 5 yearsCoupon Rate is 7%YTM is 6 %

4a. Coupon bond price = (Par x PVIF) + (Coupon x PVIFA) 4b. What is the price of a coupon bond that has a par value of $1000, a maturity of 5 years, a coupon rate of 7% and a YTM of 6% ? Price = (1000 x 0.7473) + (70 x 4.2124)=$1042

4a. Coupon bond price = (Par x PVIF) + (Coupon x PVIFA) 4b. What is the price of a coupon bond that has a par value of $1000, a maturity of 5 years, a coupon rate of 7% and a YTM of 6% ? Price = (1000 x 0.7473) + (70 x 4.2124)=$1042

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

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Please help with this practice problem.
I'm having trouble finding how to get the "4.2124" in the solution. If you can break it down for me, that would be wonderful.
C
4a. Coupon bond price = (Par x PVIF) + (Coupon x PVIFA)
4b. What is the price of a coupon bond that has a par value of $1000, a maturity of 5 years, a
coupon rate of 7% and a YTM of 6% ? Price = (1000 x 0.7473) + (70 x 4.2124) = $1042

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