Calculate the price of a coupon-paying bond maturing in two years,where the bond has a face value of $100 000,yield of 7.5% p.a.and coupon rate of 7.5% p.a.Assume interest rates are paid half yearly and the last coupon payment has just been made.

A) $ \$ 98 \quad 566 $
B) $ \$ 98 \quad 887 $
C) $ \$ 100 \quad 000 $
D) $ \$ 102 \quad 332 $

Question

Calculate the price of a coupon-paying bond maturing in two years,where the bond has a face value of $100 000,yield of 7.5% p.a.and coupon rate of 7.5% p.a.Assume interest rates are paid half yearly and the last coupon payment has just been made.

A) $ \$ 98 \quad 566 $
B) $ \$ 98 \quad 887 $
C) $ \$ 100 \quad 000 $
D) $ \$ 102 \quad 332 $

Quizplus · Accepted Answer

The price is the sum of the present value of four coupon payments of $3750,plus a single payment of $100 000 after four periods.The PV of each period's cash flows is $3614,$3484,$3358,$89544 = $100000.Note: The periodic discount rate is 3.75%.

Calculate the Price of a Coupon-Paying Bond Maturing in Two $98566 \$ 98 \quad 566 $98566

Calculate the Price of a Coupon-Paying Bond Maturing in Two $\$ 98 \quad 566$