Question
d. Assume that you have a one-year coupon bond with a face value of $1,000 and a coupon payment of $50. What is the price
d. Assume that you have a one-year coupon bond with a face value of $1,000 and a coupon payment of $50. What is the price of the bond if the yield to maturity is 6%?
e. Assume that you have the same bond is in part d, except instead of paying one annual payment of $50, the bond pays two semi-annual payments of $25 (one six months from now and another payment in twelve months). What is the price of this bond if the yield to maturity is 6%?
f. Use the approximation formula to calculate the yield to maturity for a ten year bond that has a coupon payment of $20, a face value of $1,000 and a price of $1,040.
g. Calculate the yield to maturity of a six-month zero coupon bond that has a price of $990 and a face value of $1,000.
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