Intro A corporate bond has 2 years to maturity, a coupon rate of 5%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 0.065. IB | Attempt 1/18 for 10 pts. Part 1 What is the price of the bond (in $)? 972.29 Correct Since market interest rates (or yields or yield to maturity), are quoted as bond equivalent yields (a type of APR), we need to divide the quoted rate by 2: Period rate: r = 0.065 2 0.0325 The 6-monthly interest payment, or coupon, is: Coupon rate 0.05 Coupon Face value = 2 2 = 1,000 = 25 Bond price: Coupon P= Par value 1 1 (1+r)? + r (1+r)? 1 25 0.0325 1 4 1,000 + (1 + 0.0325)4 (1 + 0.0325) = 972.29 Part 2 8 Attempt 4/18 for 10 pts. What is the bond's duration? k+ decimals Submit