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A bond with a face value of $10,000 has 4 years and 28 days left to maturity. The coupon rate is 4%. Interest payments are
A bond with a face value of $10,000 has 4 years and 28 days left to maturity.
The coupon rate is 4%.
Interest payments are paid quarterly.
The bond will be discounted at an annual rate of 8%.
- Diagram the cash flows of this bond.
- What is the current price of this bond?
- How is the extra 28 days handled in the pricing of the bond?
- What are the risks of this bond? (looking for 2 risks on bonds)
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Understanding Financial Risk Management
Authors: Angelo Corelli
1st Edition
0415746183, 978-0415746182
