Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
-
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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started