Esther is a property manager. On 1 june 2015. it listed 1000 bonds with interest of13% p.a paid semi annually at a face value of $100 and maturing on 1 june 2018. the bonds were issued at a yield set 6.36% higher than the 10 year Australian government bond yield ( which was running 6% p.a in 2014) compounded semi-annually.

1. What is the semi-annual interest payment?
2. What is the semi-annual yield?
3. What is the present value of interest payment on one bond?
4. What is the present value of the face value (principal) on one bond?
5. What is the total value of the bond issue?

Answer rating: 100% (QA)

SOLUTION A The semiannual interest payment is 650 Calculation Interest rate 13 pa Semiannual interest rate 132 pa 65 pa Semiannual interest payment Fa... View the full answer