1. Pakistan State Oil (PSO) issues a bond with a par value of PKR1,000, 15 years to maturity, and a coupon rate of 5 percent paid annually. If the yield to maturity is 4 percent, what is the current price of the bond?
P=50×1−1.04−150.04+1,0001.0415=PKR1,111.18.P = 50×\frac{1 - 1.04^{-15}} {0.04} + \frac{1,000} {1.04^{15}} = PKR1,111.18.P=50×0.041−1.04−15+1.04151,000=PKR1,111.18.
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