May I please have help with this Assume you have a bond with a % an three years
ID: 2821116 • Letter: M
Question
May I please have help with this
Assume you have a bond with a % an three years and the par $1,000. Coupor (i.e., just addition, subtraction, multiplication and price. See the slides for an example. SHOW ALL OF coupon of 6% and current market rates are 4%. The r value is $1,000. Coupons are semiannual. Use the brute force methon maturity is division; ie., no financial calculator) to find YOUR WORK. w the financial calculator solution by filling in the blanks below. Your answer should b the same as above. PMT Solve for PV 3. Fill in the blank spaces in the following table using a financial calculator> BOND A: BOND B: N 66 6 N 12 12 12 PMT 30 30 30 PMT 30 30 30 FV 1000 1000 1000 FV1000 1000 1000 PV PVExplanation / Answer
1)
CAsh flow per period=1000*0.06/2=30
PV factor=1/(1.02^(n*2)) where n is the period
Hence price of bond=$1,056.01
2)
1056.01
3)
Period Cash flows PV factor PV of cash flow 0.5 $ 30.00 0.980392 $ 29.41 1 $ 30.00 0.961169 $ 28.84 1.5 $ 30.00 0.942322 $ 28.27 2 $ 30.00 0.923845 $ 27.72 2.5 $ 30.00 0.905731 $ 27.17 3 $ 1,030.00 0.887971 $ 914.61 Total $ 1,056.01