Question: please do not use excel and go step by step Problem 1 (points): A risk-free 1-year 20% coupon bond has YTM=8% while a risk-free 1-year
Problem 1 (points): A risk-free 1-year 20% coupon bond has YTM=8% while a risk-free 1-year 5% coupon bond has YTM=8.2%. Find the price of a 6-month 14% coupon bond. Assume you can freely buy or sell these bonds. Problem 1(7 points): A risk-free 1-year 20% coupon bond has YTM=8% while a risk-free 1- year 5% coupon bond has YTM=8.2%. Find the price of a 6-month 14% coupon bond. Assume you can freely buy or sell these bonds. Specific assignment instructions: All interest rates are annual interest rates with semi-annual compounding. All coupon rates are annual rates paid semi-annually. All bonds have a $100 face value. Keep at least 6 decimal digits in all your calculation and answers unless specified otherwise. Show your work!!! Write down the equations you are using and then write down the same equations with appropriate numbers plugged in. If your work is clear but you make an arithmetic mistake, you may receive generous partial credit; however, if the work is unclear or missing, a significant penalty may be applied
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