1. Consider the two bonds as given below: a). Bond X has 12 years to maturity,...
1. Consider the two bonds as given below:
a). Bond X has 12 years to maturity, a coupon rate of 8% with a part value of $1,000, and the yield-to-maturity of 6%. Calculate the price of the bond.
b).Bond Y has 18 years to maturity, it is a zero-coupon bond with a part value of $1,000. If this bond yields to 8 %, what would the price of this bond be?
Homework Answers
price of bond in part a) has been calculated using PV function in Excel
in part b) price of bond = par value/((1+r)n)
where; r = yield to maturity , n = time to maturity
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