Suppose a 2 year bond with F = C = 1000, and a nominal annual coupon rate convertible semian- nually of 10% is purchased at a price to yield 8% convertible semiannually. (a) Calculate the price of the bond using the basic formula, and the premium/discount formula. Hint: 1036.30| (b) Calculate the BV after 1 year (2 terms). Hint: 1018.86 (c) Calculate the amount of interest in the third coupon. Hint: 40.75 (d) Calculate the amount of amortization of premium in the third coupon. Hint: 9.25

Suppose a 2 year bond with F = C = 1000, and a nominal annual coupon rate convertible semian- nually of 10% is purchased at a price to yield 8% convertible semiannually. (a) Calculate the price of the bond using the basic formula, and the premium/discount formula. Hint: 1036.30| (b) Calculate the BV after 1 year (2 terms). Hint: 1018.86 (c) Calculate the amount of interest in the third coupon. Hint: 40.75 (d) Calculate the amount of amortization of premium in the third coupon. Hint: 9.25

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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