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The principal amount of a bond is kes 12,000, the maturity is 6 years, the coupon rate is 18.5%, and interest payments are made annually.
The principal amount of a bond is kes 12,000, the maturity is 6 years, the coupon rate is 18.5%, and interest payments are made annually. The market interest rate used to discount the bonds expected cash flows until maturity is assumed to be constant at 18.5 %. The bonds are issued and redeemed at par. For the partially amortized bond, the balloon payment is kes 4500 at maturity. e) Calculate the cash flows if: i. the bond is a bullet bond (2 marks) ii. the bond is fully amortized bond (3 marks) iii. the bond is partially amortized bond.
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