Question
Interest rates are at 10% for every maturity. Consider a bond with face value $500, a coupon rate of 20% and a maturity equal to
Interest rates are at 10% for every maturity. Consider a bond with face value $500, a coupon rate of 20% and a maturity equal to 2 years.
1. Price the bond if the coupon is paid annually.
2. Price the bond if the coupon is paid semiannually.
3. Compare your answers in (1) and (2). Is there a difference and why?
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Financial Management Principles And Practice
Authors: Timothy Gallagher
6th Edition
1930789157, 978-1930789159
