(a). A 20-year coupon bond with a face value of $100,000 sells for a price of $60,727.42, has a yield to maturity of i = 0.08, and makes annual coupon payments. Find the value of the bond's annual coupon payment (rounded to the nearest cent) and the bond's coupon rate.
(b). A bank makes a fixed payment loan to a student for $25,000. The loan is to be repaid in 10 annual fixed payments beginning 4 years after the loan is made. That is, supposing that the loan is made at the beginning of year 0, the fixed payments FP start at the beginning of year 4 and continue through the beginning of year 13:
If the lender requires a yield to maturity of i = 0.03, what must be the value of the annual fixed payments?

Answer rating: 100% (QA)

a Face value 100000 t 20 yrs Price 6072742 i 8 Let coupon payments be ... View the full answer