ONLY ANSWER 7.2

Chapter 7 - Practice Questions (Please fill in the highlighted cells in light blue.) Practice 7.1 Find Bond Valuation As with any financial instrument, the price of a bond is just the present value of the future cash flows. What is the price of a bond with semiannual coupon payments and the following characteristics? Coupon rate: 6.00% Years to maturity: 15 Yield to maturity: 8.00% Par value: $ 1,000 Since the bond has semiannual payments, the coupon payments will be: Coupon payments: Now we can find the present value of the coupon payments, the present value of par, and the bond price, which are: Present value of coupon payments: Present value of par: Bond price: Of course, we could have entered the coupon payments and par value in the same PV function, making sure that both were negative. This would give us: Bond price: Practice 7.2 Find Bond Valuation Using the Price Function What is the price of a bond with the following characteristics? Years to maturity 5 Settlement date: Maturity date: Annual coupon rate: 9.00% Yield to maturity: 7.50% Face value (% of par): 100 Coupons per year: 2 Bond price (% of par): Dollar price of bond