A three-year bond with 11% coupon rate and $1,000 face value yields 8.3% p.a., compounded annually. Assuming annual coupon payments, calculate the price of the bond. (Round your answer in dollars to 2 decimal places, e.g. put 1204.42 if your answer is 1204.4243.)

To calculate the price of the bond, we need to calculate the present value of the future cash flows, which are the coupon payments and the face value of the bond.

1. First, we need to calculate the annual coupon payment. This is the coupon rate times the face value, which is 11% * $1,000 =$110.

2. The yield is given as an annual interest rate, so we don't need to convert it.

3. Now we can calculate the present value of the coupon payments. This is the sum of the present value of each payment, which is the payment divided by (1 + yield) to the power of the period number. The formula for the present value of an annuity can be used here, which is:

   PV = C * [(1 - (1 + r)^-n ) / r]

   where C is the coupon payment, r is the yield, and n is the number of periods.

   Substituting the values, we get:

   PV = 110 * [(1 - (1 + 0.083)^-3 ) / 0.083] = $294.96

4. The present value of the face value of the bond is the face value divided by (1 + yield) to the power of the number of periods, which is:

   PV = 1000 / (1 + 0.083)^3 = $793.83

5. The price of the bond is the sum of these two present values, which is $294.96 +$793.83 = $1088.79

So, the price of the bond is $1088.79.