Question
Missing information on a bond. Your broker faxed you the following information on two semiannual coupon bonds that you are considering as a potential investment.
Missing information on a bond. Your broker faxed you the following information on two semiannual coupon bonds that you are considering as a potential investment. Unfortunately, your fax machine is blurring some of the items and all you can read from the fax on the two different bonds is the following information:
IBM Coupon Bond:
Face value (Par) - $1,000
Coupon Rate - 6.5%
Yield to maturity - 11.5%
Years to maturity - 20
Price - n/a
AOL Coupon Bond:
Face value (Par) - $5,000
Coupon Rate - n/a
Yield to maturity - 8.5%
Years to maturity - 30
Price $5,269.91
A. What is the price of the IBM coupon bond?
B. What is the coupon rate for the AOL coupon bond?
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