Question: A 20-year bond is issued today with a face value of $1,000. The bond pays semi-annual coupon at 5% p.a. (nominal). The issue price gives
A 20-year bond is issued today with a face value of $1,000. The bond pays semi-annual coupon at 5% p.a. (nominal). The issue price gives potential investor a yield to maturity of 6% p.a. (nominal). Without calculation, you can tell the bond must be a bond. (1 mark) You have this conclusion because (Select one of the following reasons). (1 mark) Othis is a coupon bond Othe face value must be lowex than the price of the bond Othe bond pays coupon every half year Othe coupon rate is smaller than the yield to maturity Calculate the issue price of the bond. (Round your answer to 2 decimal places. Do not include the $ symbol. Do not use comma separators. E.g. 1234.56) (2 marks)
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