A company issues a ten-year bond at par with a coupon rate of 6.1% paid semi-annually....

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Answer 1

Answer #1

Particulars	Cash flow	Discount factor	Discounted cash flow
present value Interest payments-Annuity (4.3%,16 periods)	30.5	11.39860	347.66
Present value of bond face amount -Present value (4.3%,16 periods)	1,000	0.50986	509.86

Bond price			857.52
Face value			1,000.00
Premium/(Discount)			-142.48


Interest amount:
Face value	1,000
Coupon/stated Rate of interest	6.100%
Frequency of payment(once in)	6 months
Interest amount	10000.0616/12=		30.5

Present value calculation:
yield to maturity/Effective rate	8.60%
Effective interest per period(i)	0.086*6/12=		4.300%


Number of periods:
Particulars	Amount
Number of interest payments in a year	2
Years to maturiy	8.0
Number of periods	16

Price of bond is $858.

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Answer 2

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