QUESTION 7 Anheuser-Busch has issued a bond with the following characteristics: maturity: 20 vears, coupon rate:...

Question

Question

Answer 1

Answer #1

Semi-annual required yield = 7.3%/2 = 3.65%

Price of bond is equal to the present value of all future coupon payments and the principal amount

= 1000*7.2%*1/2*PVAF(3.65%, 40 periods) + 1000*PVF(3.65%, 40 periods)

= 36*20.8669 +1000*0.2384

= $989.6084

i.e. $989.61

Answer 2

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