A bond paying semi-annual coupons and maturing in 3 years has a price of $765.31 if the yield rate is j₂ = 15%.The write-up in the book value in the last period is $46.51.What is the coupon paid each period,Fr?

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Quizplus · Accepted Answer

The correct answer is A because the coupon paid each period is $25.00. This can be calculated using the following formula:Fr = (C / 2) * (1 - (1 + j2 / 2)^(-n * 2)) / (j2 / 2) + (C / 2) / (1 + j2 / 2)^(-n * 2)where:Fr is the coupon paid each periodC is the annual coupon paymentj2 is the yield raten is the number of years to maturity

A Bond Paying Semi-Annual Coupons and Maturing in 3 Years