115Bond Question 1±Consider 20-year bond paying semi-annual coupons±Coupon rate:10.5%±YTM:12.0%±How much would you pay for this bond?()158870601000106011106015.52$40400.$.,$..P=++⎥⎥⎦⎤⎢⎢⎣⎡⎟⎟⎠⎞⎜⎜⎝⎛+−=16Bond Question 2±$1000 face value bond with rC= 12%±P0= $1195±Is the discount rate (YTM) greater than, less than or equal to the coupon rate?±rC> YTM (selling at a premium)17Bond Question 3±Consider bonds A and B±Both are 10 year bonds±Bond A has a 4% annualcoupon and Bond B has a 10% annualcoupon ±If the discount rate is 10%, what is the price of
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This note was uploaded on 11/01/2011 for the course BUSINESS FIN301 taught by Professor Andrew during the Fall '10 term at University of Alberta.