BOND PRICING

Semi-Annual YTM and Price Sensitivity

	For this problem consider the bond price if the time until it matures equals the values in column E.

Inputs

Bond Price as Time Approaches Maturity

Annual Coupon Rate

4%

Time Until Maturity

Bond Price

Yield to Maturity (Annualized)

1.75%

0

Number of Payments / Year

2

1

Number of Years to Maturity

8

2

Face Value

$1,000

3

4

Outputs

5

YTM / Payment

6

Semiannual Coupon Payment

7

8

Bond Price as YTM Changes

YTM

Bond Price

1%

	For this problem consider the bond price when the YTM changes.

2%

3%

4%

5%

6%

7%

8%

9%

10%

What three things must be done if payments are semi-annual rather than annual?

1)

2)

3)