Question

d. Assume that you have a one-year coupon bond with a face value of $1,000 and a coupon payment of $50. What is the price of the bond if the yield to maturity is 6%?

e. Assume that you have the same bond is in part d, except instead of paying one annual payment of $50, the bond pays two semi-annual payments of $25 (one six months from now and another payment in twelve months). What is the price of this bond if the yield to maturity is 6%?

f. Use the approximation formula to calculate the yield to maturity for a ten year bond that has a coupon payment of $20, a face value of $1,000 and a price of $1,040.

g. Calculate the yield to maturity of a six-month zero coupon bond that has a price of $990 and a face value of $1,000.

Answer 1

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AS ASKED BY YOU, PROVIDING WITH FORMULA AS WELL. THANK YOU

Home ert Page Layout Formulas Data Review V 義Cut ta copy." Format Painter Add-Ins 短 Σ AutoSum , Fill Sort &Find & Insert Delete Format Conditional Format C Formatting ▼ as Table-styles ▼ ¡Ef론函Merge & Center. $ , % , tsB.08 2 Clear , Ξ Filter Select ▼ B l u. ㅡ· 3x, Α. 袖 ▼ ▼ Cells dting Font Alignment Clipboard N123 105 106 107 108 109 110 1000 FACE VALUE COUPON YTM YEAR PRICE 5% 112 113 114 115 116 990.57 EXCEL PV(Q111,Q112,-Q110,-Q109) 1000 FACE VALUE COUPON YTM YEAR PERIODS PRICE 5% 118 119 120 121 122 123 :4 ト 커 990.43 EXCEL -PV(Q117/0119,Q118 0119,-Q116/Q119,-Q115) CLEAN INVOICE PRICE Sheet1 Sheet3 Sheet4 SheetS L I MR. İNFLATION YIELD WARRANT efund bond NOTE BIDDING, UNDERWRITING EUAC AW PM LIFE 04:41

Home ert Page Layout Formulas Data Review V Add-Ins 義Cut aCopy Format Painter 短 AutoSum 11 Arap Text Fill В า 프. m. a-Δ. Ξミ 迣锂函Merge & Center. $, % , 弼皛Conditional Format. Cell. Insert Delete Format Sort &Find & Formatting as Table Styles ClearFilter Select Clipboard Font Alignment Cells dting M126 121 122 123 124 125 APPROXIMATION FORMULA COUPON YEARS ISSUE PRICE PAR VALUE 20.00 C-20 10 n=10 1040 P-1040 1000 M 128 129 130 131 132 133 134 135 136 137 138 139 :4 ト 커 YTM APPROXIMATION 1.57% (C + (MP/n))/(M + P)/2 PRICE FACE VALUE YEARS 1000 0.5 YTM 2.03% EXCEL-RATE(Q132,-Q130,Q131) NOTE BIDDING, UNDERWRITING EUAC AW PM LIFE L I MR. İNFLATION YIELD WARRANT efund bond CLEAN INVOICE PRICE Sheet1 Sheet3. Sheet4 SheetS

Home ert Page Layout Formulas Data Review V Add-Ins 義Cut aCopy Format Painter Σ AutoSum , Fill В า 프. m. a-Δ. Ξミ 迣锂函Merge & Center. $, % , 弼皛Conditional Format. Cell. Insert Delete Format Sort &Find & Filter Select 袖 Formatting ▼ as Table-styles ▼ 2 Clear , ▼ ▼ ▼ Clipboard Font Alignment Cells dting U107 AB AC AD AE AF AG AH AI 107 108 109 110 WITH FORMULA PRICE-COUPON X PVI FA @6% FOR 1 YEAR + FACE VALUE X PVIF@6%, 1 YEAR PRICE 50*(1/0.06)*1-(1/1+0.06)A1) 1000 X 1/(1+0.06)A1 PRICE PVIFA FORMULA PV IF FORMULA 1/(1+r)An 112 113 114 115 116 990.57 SEMI ANNUAL COUPON COUPON &RATE WILL BE DIVIDED BY 2 & YEARS WILL BE MULPLIED BY 2 PRICE-COUPON X PVI FA @3% FOR 2 YEAR + FACE VALUE X PVIF@3%, 2 YEAR PRICE> 25% 1/0.03)*(1-(1/(1+0.03)^2) + 1000 X 1/(1+0.03)^2 PRICE 118 119 1200115) 121 122 123 124 125 จ ト 커 NOTE BIDDING, UNDERWRITING EUAC AW PM LIFE L I MR INFLATION YIELD WARRANTrefund bond CLEAN INVOICE PRICE Sheet1 Sheet3. Sheet4 SheetS 990.43 IS DOWN WITH FORMULA ONLY YTM = (1000/99O)^2-1-2.03% YTM = (FV/PV)^mn-1- m=2, n = 1 m= 2 AS IT IS SIX MONTH VALUE 19-02-2019