Question

Following is information about bonds that are identical except for their terms to maturity:

  

                           Bond         Coupon           Maturity           Price              Yield

                              A             5.25%             12/31/21            98.05             5.97%

                              B             5.80                12/31/22              ?                  6.20

                             C             5.91                12/31/23          100.30              ?

                              D             6.35                12/31/24          103.06              ?

                              E             6.50                12/31/25              ?                  5.55

                              F              ?                    12/31/26          104.82             5.40

Assume that today is December 31, 2018. Each bond pays interest semiannually, on June 30 and December 31 every year.

Based on the given information, complete the computations and answer the questions that follow.

1.   Compute the values that are missing in the table above (i.e. fill in the appropriate values where there are question marks).

Answer 1

Term is number of semiannual periods. We will use excel functions to compute the missing values.

Bond	Coupon	Term	Price	Yield
A	5.25%	6	98.05	5.97%
B	5.80%	8	$98.60	6.20%
C	5.91%	10	100.3	5.84%
D	6.35%	12	103.06	5.74%
E	6.50%	14	$105.45	5.55%
F	6.15%	16	104.82	5.40%

WORKINGS