The bond's price assumes face value is $1,000 is $1,137.65
Nominal value refers to the dollar value of a financial instrument at the time of issuance. The face value of a bond is the price that the issuer will pay at maturity, and bond prices and bond yields are inversely related. If bond prices go up, yields go down. When bond prices fall, yields rise. This is because the bond's coupon rate remains fixed, so the secondary market price fluctuates frequently in line with prevailing market interest rates. The value printed or depicted on a coin, banknote, stamp, ticket, especially if it is less than its actual or intrinsic value.
The Price of the Bond is the aggregate value of the Present Value of the coupon amounts plus the present value of the face value
Face Value = $1,000
Semi-annual Coupon Amount = $19.375 [$1,000 x 3.875% x ½]
Semi-annual Yield to Maturity = 1.55% [3.10% x ½]
Maturity Years = 52 Years [(2041 – 2015 ) x 2]
The Bond Price = Present Value of the Coupon payments + Present Value of Face Value
= $19.375[PVIFA 1.55%, 52 Years] + $1,000[PVIF 1.55%, 52 Years]
= [$19.375 x 35.52186] + [$1,000 x 0.44941]
= $688.24 + $449.41
= $1,137.65
Therefore, Bond Price = $1,137.65
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