Question
You have a bond with face value of $100, coupon rate of 5.50%, semiannual coupon pay-ments, maturity of 8 years, and a yield to maturity
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You have a bond with face value of $100, coupon rate of 5.50%, semiannual coupon pay-ments, maturity of 8 years, and a yield to maturity of 5.00%. This bond allows the issuer to not make coupon payments for first the 2 years. Find its price.
(a) $92.92 (b) $102.56 (c) $80.06 (d) $103.26
You have a bond with face value of $100, coupon rate of 5.50%, semiannual coupon pay-ments, maturity of 8 years, and a yield to maturity of 5.00%. This bond allows the issuer to not make coupon payments for first the 2 years. Find its price.
(a) $92.92 (b) $102.56 (c) $80.06 (d) $103.26
I understand how to get coupon rate and set up formula. I use TSM solver in TI-83 calculator. I keep on getting 102.56 (B) but the correct answer is A. What am I missing and how do I account for those first 2 years where you don't have to pay? Thanks
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
