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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  • selenica
    selenica
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    $10.00
    ANSWER
    Tutor has posted answer for $10.00. See answer's preview

    ***** 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 = *****

    Buy

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