a) Please calculate the value of a 5-year bond with an interest rate of 5% and a nominal value of 2,500$ which pays interest every six months, and we value it for two years and four months after the issue. The income rate of this bond is equivalent to the income rate of a 5-year zero coupon bond with a nominal value of 10,000$ sold at a discount of 1780.73$ (5 points)
b) Please provide a clean price, a dirty price and an accrued interest. (2 points)
c) Please specify if the (coupon) bond is sold at a premium or at a discount. (1 points)
d) Please explain if and when the zero coupon bond can be sold at a premium? (2 points)

Answer rating: 100% (QA)

A since the zero coupon bond is sold at discount of 178073 its market value pv is 821927 Now PV... View the full answer