Question
question 1:Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German
question 1:Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000, 9 years to maturity, and a coupon rate of 7.1 percent paid annually. If the YTM is 9.1 percent, what is the current bond price in euros?
Question 2- Find the EAR in each of the following cases.
stated rate(apr) NUMBER OF TIMES COMPOUNDED EAR%
11.25 % Quarterly
14.75 % Monthly
17.25% Daily
13.25% Semiannualy
Question 3:
Both Bond Sam and Bond Dave have 10.2 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 21 years to maturity. Both bonds have a par value of 1,000.
a)If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? Bond sam % ? Bond dam%?
b) If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of these bonds? Bond sam % ? Bond dam%?
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