TraChem Corporation issues Series Z bonds and Series C bonds. Both bonds have par values of $10,000 and investors trade

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answerhappygod
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TraChem Corporation issues Series Z bonds and Series C bonds. Both bonds have par values of $10,000 and investors trade

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TraChem Corporation issues Series Z bonds and Series C
bonds. Both bonds have par values of $10,000 and investors
trade both bonds at prices indicating a YTM of 5.0%. The
Series Z is a zero-coupon bond with a maturity in 10 years.
The Series C, maturing in 6 years, is a hybridized bond that pays
no coupon for the first year; then pays $300 every six months for
three years (six total payments), and finally makes four $700
payments in the last two years.
What is the current price of a Series Z
bond? (Hint: The convention for zero-coupon bonds is
to calculate the return on a semi-annual basis.)
A) $9,656.26
B) $7,850.19
C) $6,223,02
D) $6,102.71
E) $6,257.30
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