Question
A) Which of the following is NOT an adjustment you need to make for semiannual coupons? Group of answer choices Multiply annual payments by 2.
A) Which of the following is NOT an adjustment you need to make for semiannual coupons?
Group of answer choices
Multiply annual payments by 2.
Divide YTM by 2.
Divide the dollar coupon by 2.
Multiply the face value by 2.
B) All of these are necessary to adjust for semiannual coupons.
As with most bonds, consider a bond with a face value of $1,000. The bond's maturity is 19 years, the coupon rate is 14% paid semiannually, and the market yield (discount rate) is 5%.
What is the estimated value of this bond today?
C) Assume you have just obtained the semiannual YTM for a bond that pays semiannual coupons. How do you state this YTM on an annual basis?
Group of answer choices
Multiply the semiannual YTM by 2.
Divide the semiannual YTM by 2.
Take the square root of the semiannual YTM.
Square the semiannual YTM.
Calculate the logarithm of the semiannual YTM.
D) Assume you buy a bond with a face value of $1,000, a maturity of 5 years, and a coupon rate of 7%. Assume that the YTM remains constant and equal to 7% throughout the life of the bond. What will be your accumulated interest income by the time the bond matures?
Enter your answer in dollars, rounded to the nearest cent (2 decimals).
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