Chapter 7 - Bond Valuation Examples with Solutions - Bond...

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Bond Valuation Examples - Solution Page 1 Bond Valuation - Example 1Assume that a corporate bond has a par value of $1,000 and 8 years until it matures. This bond also has an annual coupon rate of 7.5%, but pays interest every 6 months. If investors require an annual nominal rate of returnof 8.6% (compounded semi-annually), then what should be the current price for this bond?
Bond Valuation Examples - Solution Page 2
Bond Valuation Examples - Solution Page 3 Bond Valuation – Example 2Assume that a corporate bond has a par value of $1,000 and 15 years until it matures. Also assume that investors require an annual effective rate of returnof 12.36% (compounded semi-annually), that coupon interest is paid semi-annually, and that the current price for this bond is $931.18. What is the annual coupon rate on this bond?
Bond Valuation Examples - Solution Page 4
= 6%
Bond Valuation Examples - Solution Page 5

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