Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with five years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $1,018,871.86 O$849,059.88 O$721,700.90 $534,907.72 Based on your calculations and understanding of semiannual coupon bonds, complete the following statements: The T-note described in this problem is selling at a Rating agencies-such as Standard & Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as a junk bond? A bond with a B rating, an 11% return on capital, a 87% total debt to total capital, and a 26% yield OA bond with a BBB rating, a 14% return on capital, a 42% total debt to total capital, and a 10% yield You heard that rating agencies have upgraded a bond's rating. The yield on the bond is likely to ,and the bond's price will Assume you make the following investments: A $10,000 investment in a 10-year T-bond that yields 9.00%, and A $20,000 investment in a 10-year corporate bond with an BBB rating and a yield of 11.30% Based on this information, and the knowledge that the difference in liquidity risk premiums between the two bonds is 0.40%, what is your estimate of the corporate bond's default risk premium? O 2.30% O 2.66% O1.90% O 3.23%