Question
Suppose you buy a 3-year corporate bond of $1,000,000 (i.e. you lend $1,000,000 to the corporation issuing the bond) with a coupon interest rate of
Suppose you buy a 3-year corporate bond of $1,000,000 (i.e. you lend $1,000,000 to the corporation issuing the bond) with a coupon interest rate of 3.5% per annum.
a.If the bond is semiannual pay, list the payments you receive and when:
b.If this bond has a yield of 4.0% per annum,
i.What is its percentage-of-par price? (Use decimal form for the calculations: c = 0.035, y = 0.040, principal = 1.0 you will get a decimal answer, then convert that percentage with two decimal points XX.xx%)
ii.Using that percentage-of-par price what would you pay to buy the $100,000 bond?
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