QUESTION 4 (10 marks) Each of the following bonds has a $100 par value Bond Coupon interest rate ( p a ) Coupon payment Years to maturity Yield to maturity ( p a ) A 4 25 Annual 15 3 50 B 2 10 Semi annual 15 3 50 a)Calculate the value of Bond A (5 marks) b)Calculate the value of Bond B (5 marks)

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QUESTION 4 (10 marks) Each of the following bonds has a $100 par value. Bond Coupon interest rate (% p.a.) Coupon payment Years to maturity

QUESTION 4 (10 marks)

Each of the following bonds has a $100 par value.

Bond

Coupon interest rate

(% p.a.)

Coupon payment

Years to maturity

Yield to maturity

(% p.a.)

4.25

Annual

3.50

2.10

Semi-annual

3.50

a)Calculate the value of Bond A (5 marks)

b)Calculate the value of Bond B (5 marks)

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