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how to calculate the value of a bond that is priced to yield x%
user
the idea is correct; the details are a little off. you need to apply it to the actual cash flow the bond would create. the best advice i can give you is to draw a time-line diagram. then you would see that you receive £35 in 6 months, £35 in 12 months, £35 in 18 months, and £1035 in 24 months.  use  the method you've presented in your question and the interest rate you've calculated, 3% per 6 months, to discount each payment the specified amount, and you're done. ps:  if there were more coupons, say a 20 year quarterly bond, it would speed things up to use the present value of an annuity formula to discount all the coupons in one step...
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