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QUESTION

Bonds

7-21 Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?

7-27 Yield to Maturity A 5.65 percent coupon bond with 18 years left to maturity is offered for sale at $1,035.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.)

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ANSWER

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$10.00

***** Value ** Bond ***** = $ 103525

*** ********* of Bond must ** * *****

Coupon rate * *****

Interest is semi *******

**** to ******** * ** ******

****** ***** of Bond * interest ********* * ******* price * ****** *** (565%/2))^18*2 ** 103525

******

***** ** **** * ********* ***

*****

question: **** *

*

coupon payment * * ******

********

rate * *** ** *** **** ****** = 34% **** annual M * *** *****

(

******** ** ** ******* * * ******** ****** =

15years

*** **** **** ****** * ** ** * 30 ********* = ** * *** *********** *

*

*** * **** * (1+34%)30 *** * ***** * ***** ** *

***

+ **** * 27266 = 19 * * * **** * ****

+

36676 * ***** / **** * ****** * ***** +

******

********* **** price = *****

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