Consider a bond with a 7 percent semi-annual coupon and a face value of $1000. Complete...

Question

Question

Consider a bond with a 7 percent semi-annual coupon and a face value of $1000. Complete the following table. Note that yield to maturity is quoted annually.

Answer 1

Answer #1

Formula to bond pricing is given below:

Vcoupons=∑C/(1+r)^t

Vface value=F/(1+r)^T

where:C=future cash flows, that is, coupon payments

r=discount rate, that is, yield to maturity

F=face value of the bond

t=number of periods

T=time to maturity

with the above formula we will find the value of bond as well as yield to maturity.

Please find the filled table as below:

Answer 2

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