Question

1.		Calculate the price of a 30-year annual coupon-ed bond with a coupon rate of 5%, a market rate of 7%, and a face value of $1000.
		n	i	PV	PMT	FV
		fill in data …	… fill in data		… fill in data	… fill in data
				put answer here		2019 Spring2
2.		Calculate the price of a 30-year semiannual coupon-ed bond with a coupon rate of 5%, a market rate of 7%, and a face value of $1000.
		n	i	PV	PMT	FV
		fill in data …	… fill in data		… fill in data	… fill in data
				put answer here
3.		In previous Questions 1 and 2, with all the same maturity, coupon rate, market rate and face value, explain why the price of the bond is different.
		Put your response here:

Answer 1

			n	i	PV	PMT	FV
			30	7%		$50	$1,000
					$751.82
	i	Annual Interest rate	7%
	n	Number of coupon payments	30
	PMT	AnnualCoupon Payment	$50	(1000*5%)
	PV	Price ofbBond	$751.82	(Using Pv function of excelwith Rate=7%,Nper=30, Pmt=-50, Fv=-1000)
			n	i	PV	PMT	FV
			60	3.5%		$25	$1,000
					put answer here
	n	Number of coupon payments	60	(30*2)
	PMT	Semi-AnnualCoupon Payment	$25	(1000*5%)/2
	i	Semi-AnnualInterest Rate	3.50%	(7/2)%
	PV	Price ofbBond	$750.55	(Using Pv function of excel with Rate=3.5%,Nper=60, Pmt=-25, Fv=-1000)
		The Price is different because of different cash flow
		In question 1 there is cash flow once a year
		In question 2 cash flow occurs twice   a year
		Bond duration are different