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Question 3 (a) Calculate the price of a five-year coupon bond, with principal $6,000, annual coupon rate 4.8 per cent, and required annual rate of

Question 3

(a) Calculate the price of a five-year coupon bond, with principal $6,000, annual coupon rate 4.8 per cent, and required annual rate of return 9.6 per cent. Show your working clearly. (5 marks)

(b) How does your answer to (a) change when the coupons are payable semi-annually? Show your working clearly. (5 marks)

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