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An investor will pay 2318.63 for an n year 2000 part bound with a coupon rate of 10% compounded semiannually or he will pay 2531.05 for an n year 2000 part bond with a coupon rate of 11% compoun
An investor will pay 2318.63 for an n year 2000 part bound with a coupon rate of 10% compounded semiannually or he will pay
2531.05 for an n year 2000 part bond with a coupon rate of 11% compounded semiannually. Assuming that the investor gets the same yield on the two
bonds find this yield rate expressed as a nominal rate convertible two times per year. Also find n.
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** investor **** *** 231863 *** ** * year 2000 **** bound **** a coupon **** ** *** ********** semiannually ** he will *** 253105 for ** * **** **** **** bond **** a ****** **** ** *** compounded ************ ******** that *** ******** gets *** **** ***** ** the *** bonds find **** ***** **** ********* as * ******* **** convertible *** ***** per **** Also find ************ **** ** * 231863 ** = **** * = 010/2*2000 = ******** *** approximation ********** = ** * (F *** ****** ** + ******* * **** * ***** – 231863)/n]/ ***** * ************ * [100 * ************************* bondWe have ** * ****** ** * 2000 * * ********** = 110Using *** ************* ********** * ** + (F *** ****** (F * P)/2YTM * **** + ***** *** 253105)/n]/ ***** * ************ * **** * *********************** *** *** **** therefore[100 * ****************** * **** * ********************* * ********** = 09531 **** + ************** * ********** * ****** ***************** * **** * ** *************** ** ** ******* * [100 * ********************* * [100 – ******************* = ******* ********** * ****** = ***
