Using semiannual compounding, find the prices of the following bonds: a. A 9.4%, 15-year bond priced to yield 7.6%.
Posted: Sun Jul 03, 2022 12:54 pm
Using semiannual compounding, find the prices of thefollowing bonds:
a. A 9.4%, 15-year bond priced to yield 7.6%.
b. A 7.6%,10-year bond priced to yield 9.4%.
c. A 12.5%, 20-year bond priced at 10.7%.
Repeat the problem using annual compounding. Then comment on thedifferences you found in the prices of the bonds.
A1. Using semiannual compounding, the price of the bond is$___.
B1. Using semiannual compounding, the price of thebond is $___.
C1. Using semiannual compounding, the price of thebond is $___.
A2. Using annual compounding, the price of the bondis $___.
B2. Using annual compounding, the price of the bondis $___.
C2. Using annual compounding, the price of the bondis $___.
Comment on the differences you found in the prices of thebonds.
Bonds selling at a premium sell at lower prices when theinterest is compounded semiannually as opposed toannually. Accordingly, bonds selling at a discount sell atlower prices when the interest is compounded annually as opposed tosemiannually.
Bonds selling at a premium sell at higher prices when theinterest is compounded semiannually as opposed toannually. Accordingly, bonds selling at a discount sell athigher prices when the interest is compounded annually as opposedto semiannually.
a. A 9.4%, 15-year bond priced to yield 7.6%.
b. A 7.6%,10-year bond priced to yield 9.4%.
c. A 12.5%, 20-year bond priced at 10.7%.
Repeat the problem using annual compounding. Then comment on thedifferences you found in the prices of the bonds.
A1. Using semiannual compounding, the price of the bond is$___.
B1. Using semiannual compounding, the price of thebond is $___.
C1. Using semiannual compounding, the price of thebond is $___.
A2. Using annual compounding, the price of the bondis $___.
B2. Using annual compounding, the price of the bondis $___.
C2. Using annual compounding, the price of the bondis $___.
Comment on the differences you found in the prices of thebonds.
Bonds selling at a premium sell at lower prices when theinterest is compounded semiannually as opposed toannually. Accordingly, bonds selling at a discount sell atlower prices when the interest is compounded annually as opposed tosemiannually.
Bonds selling at a premium sell at higher prices when theinterest is compounded semiannually as opposed toannually. Accordingly, bonds selling at a discount sell athigher prices when the interest is compounded annually as opposedto semiannually.