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c) Calculate the current price of a government bond with a face value of $1000 and a coupon rate of 7%. It is an annual
c) Calculate the current price of a government bond with a face value of $1000 and a coupon rate of 7%. It is an annual coupon bond that matures in 5 years. d) Calculate the current bond price issued by Suncor Energy if it has a face value of $1000 and a coupon rate of 7%. It matures in 5 years. Use the following table to find the default risk premium. (Assume the default risk is not a function of maturity) Hint: A common practice to find a corporate bond price is to use bond ratings issued by rating agencies. 1. Use the average default risk premium of bonds with a similar rating as a benchmark for the default risk premium of the corporate bond of your interest. 2. Add the benchmark risk premium to the risk-free rate and use it as the yield to maturity of the corporate bond. **Please note that the risk-free rate depends on the payment structure of the corporate bond. c) Calculate the current price of a government bond with a face value of $1000 and a coupon rate of 7%. It is an annual coupon bond that matures in 5 years. d) Calculate the current bond price issued by Suncor Energy if it has a face value of $1000 and a coupon rate of 7%. It matures in 5 years. Use the following table to find the default risk premium. (Assume the default risk is not a function of maturity) Hint: A common practice to find a corporate bond price is to use bond ratings issued by rating agencies. 1. Use the average default risk premium of bonds with a similar rating as a benchmark for the default risk premium of the corporate bond of your interest. 2. Add the benchmark risk premium to the risk-free rate and use it as the yield to maturity of the corporate bond. **Please note that the risk-free rate depends on the payment structure of the corporate bond
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