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PLEASE SHOW WORK!! 1) Consider a 5-year bond with a 6% coupon rate (semiannual payments) and a $100 face value. What is the initial price
PLEASE SHOW WORK!!
1) Consider a 5-year bond with a 6% coupon rate (semiannual payments) and a $100 face value.
- What is the initial price of this bond if it has a 8% yield to maturity? (Note this is a semi-annual bond. Each coupon payment should be semi-annual coupon, and the discount rate should be the semi-annual rate).
- If the yield to maturity is unchanged, what will the price be immediately after the first coupon is paid?
- If the yield to maturity is unchanged, what will the total interest expense in the first year? How much interest is paid?
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