Question

10)

A) Say a $1,000 face value bond has a YTM of 10% (per year), and is currently priced at $990. If the bond matures in 8 years, what is the amount of the semi-annual coupons

B)A municipality is planning to issue a 5-year zero-coupon bond. The face value is $1,000 and the yield-to-maturity is 5.6%. What is the price of this muni-bond?

C)A company has a 4-year 10% coupon bond with a $1,000 face value. If the yield-to-maturity is 9%, what is the duration?

D) Say a $1,000 face value bond has a YTM of 10% (per year), and is currently priced at $1000. If the bond matures in 8 years, what is the amount of the semi-annual coupons?

Answer 1

A

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =8x2

990 =∑ [(Coupon rate*1000/200)/(1 + 10/200)^k]     +   1000/(1 + 10/200)^8x2

k=1

Coupon rate% = 9.82

semi annual coupon amount = parvalue*coupon rate/payments per year

=1000*0.0982/2=49.1

B

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =5

Bond Price =∑ [(0*1000/100)/(1 + 5.6/100)^k]     +   1000/(1 + 5.6/100)^5

k=1

Bond Price = 761.52

Please ask remaining parts separately, questions are unrelated. I have done one bonus