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The following shows the information of a government bond traded in the secondary market. Type of Bond Government Bond Issue Date May 16, 2006 Maturity

The following shows the information of a government bond traded in the secondary market.

Type of Bond Government Bond
Issue Date May 16, 2006
Maturity Date May 16, 2016
Face Value $100
Redemption Value $108
Coupon Rate 5% Payable Semi-annually
Yield Rate 8% convertible semi-annually

Construct the bond amortization schedule for year 5 and year 6 (i.e. for the 9th coupon and the 12th)

Assume the coupon dates are May 16th and November 16th each year. On September 20th 2010 an investor purchased the bond to yield 7% convertible semiannually. Find the purchase price, the accrued interest and the quoted price of the bond at the date of purchase.

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