Question
This question has 6 parts (a - f) Please show all work 6. Find the bond values or yields. Assume that the face value of
This question has 6 parts (a - f) Please show all work
6. Find the bond values or yields. Assume that the face value of the bonds is $1,000.
(a) Consider a bond paying a coupon rate of 6% per year semiannually when the market interest rate is only 2.5% per half-year, (i.e., the YTM is 5%). The bond has ten years until maturity. Find the bonds price today.
(b) What is the bond price six months from now in part (1)?
(c) A zero-coupon bond with face value $1,000 and maturity of thirty years sells for $250.
What is its yield to maturity?
(d) A 15-year maturity, 4.2% coupon bond paying coupons semiannually is callable in five years at a call price of $1,040. The bond currently sells at a yield to maturity of 3.6% (1.8% per half-year). What is the bond price given the YTM?
(e) What is the yield to call based on the price computed in part (4)?
(f) ABC Enterprises bonds currently sell for $975. They have a 10-year maturity, a semiannual coupon of $15. So total annual coupon payment is $30. Compute their YTM, coupon rate, and current yield.
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