1. A corporate bond has 19 years to maturity, a face value of $1,000, a coupon rate of 5.6% and pays interest semiannually. The annual market interest rate for similar bonds is 3% and is quoted as a semi-annually compounded simple interest rate, i.e 1.5% per 6-month period.What is the price of the bond?

You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 3.3% (EAR). You keep the bond for 5 years before selling it. F 1,000 The price of the bond today is Po = = 722.76 ( 1 + r )N 15 10 1.033