Question 7
Information provided:
Time= 4 years*2= 6 semi-annual periods
Interest rate= 9.5%/2= 4.75 % per semi-annual period
Par value= future value= $1,000
Coupon rate= 4.5%/2= 2.25%
Coupon payment= 0.0225*1,000= $22.50 per semi-annual period
The price of the bond is calculated by present value of the bond.
Enter the below in a financial calculator to compute the present value of the bond:
FV= 1,000
N= 8
I/Y= 4.75
PMT= 22.50
Press the CPT key and PV to compute the present value of the bond.
The value obtained is 836.7741.
Therefore, the price of the bond is $836.77.
Question 8
Information provided:
Time= 7 years*2= 14 semi-annual periods
Interest rate= 4%/2= 2 % per semi-annual period
Par value= future value= $1,000
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Question 7 2 pts Highland Corp., a U.S. company, has a 7 year bond whose yield to maturity is 4 percent. The bond has n...
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