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Please help with the following problem: Consider a bond (with par value = $1,000) paying a coupon rate of 9% per year semiannually when the
Please help with the following problem:
Consider a bond (with par value = $1,000) paying a coupon rate of 9% per year semiannually when the market interest rate is only 7% per half-year. The bond has 3 years until maturity. |
a. | Find the bond's price today and 6 months from now after the next coupon is paid. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) |
Current price | $ |
Price after six months | $ |
b. | What is the total (6-month) rate of return on the bond? (Omit the "%" sign in your response.) |
Rate of return | % |
Thank you.
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