Compute the conversion factor on a semi-annual 6.8% coupon bond,which matures in exactly 5 $ \frac{1}{2} $ years.
A) 1.037
B) 1.046
C) 1.052
D) 1.068

Question

Quizplus · Accepted Answer

The correct answer is A.The conversion factor for a semi-annual 6.8% coupon bond that matures in exactly 5 1/2 years is 1.037. This is because the conversion factor is calculated as (1 + (coupon rate / 2)) ^ (number of years * 2), which in this case is (1 + (0.068 / 2)) ^ (5.5 * 2) = 1.037.

Compute the Conversion Factor on a Semi-Annual 6 12 \frac{1}{2} 21​

Compute the Conversion Factor on a Semi-Annual 6 $\frac{1}{2}$