Please answer all questions Question 1 Assume semi-annual payments. What is the coupon rate for A...

Please answer all questions

Question 1

Assume semi-annual payments. What is the coupon rate for A bond? (Note: Becuase you are given "t" do not multiply it by 2 and remember that price quotes are as a percentage of $1000. This means to get the price, move the decimal over 1 place. For example, a price quote of 99.99 is equal to a price of $999.9.)

Bond	Coupon Rate	Yield	Price Quote	t
A		2.422	101	4.338

Question 2

Assume semi-annual payments. What is the coupon rate for a 26-year bond with a yield of 3.377% and a price of $1,008.8?

Solutions

Expert Solution

Question 1
Assume semi-annual payments. What is the coupon rate for A bond? (Note: Becuase you are given "t" do not multiply it by 2 and remember that price quotes are as a percentage of $1000. This means to get the price, move the decimal over 1 place. For example, a price quote of 99.99 is equal to a price of $999.9.)
Bond	Coupon Rate
A

Face Value = FV	1000
Rate	2.42%
Present Value = PV	1010
Nper (t)	4.338
Coupon Payment	$26.68
Coupon rate = $26.68/1000	2.6676%

b)
Assume semi-annual payments. What is the coupon rate for a 26-year bond with a yield of 3.377% and a price of $1,008.8?

Face Value = FV	1000
Rate = 3.377%/2	1.69%
Present Value = PV	1008.8
Nper (t)	52
Coupon Payment (semiannual)	$17.14
Annual Coupon Payment	$34.28
Coupon rate = $34.28/1000	3.4281%

ekkarill92 answered 1 year ago

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