Question: Problem 2 (Required, 25 marks) (a) A n-year bond has face value $4500 and redemption value $4950. It pays coupons semi- annually at annual coupon

Problem 2 (Required, 25 marks) (a) A n-year bond has face value $4500 and redemption value $4950. It pays coupons semi- annually at annual coupon rate 7.6%. It is given that The current price of the bond is $5442.7 and The bond price just after (2n-1)th coupon payment is $4974.26. Assume that the yield rate remains unchanged over the entire bond term, find the interest-due at nth coupon payment date. (b) A 20-year bond is issued today. The bond has redemption value C and is currently sold at P. You are given that The bond pays coupon semi-annually; The amount for accumulation of discount in 15th coupon is $194.82. The amount for accumulation of discount in 20th coupon is $306.69. Find the value of P-C. (Hint: Think about the premium-discount formula and figure out the two quantities that are required to find P-C.) Problem 2 (Required, 25 marks) (a) A n-year bond has face value $4500 and redemption value $4950. It pays coupons semi- annually at annual coupon rate 7.6%. It is given that The current price of the bond is $5442.7 and The bond price just after (2n-1)th coupon payment is $4974.26. Assume that the yield rate remains unchanged over the entire bond term, find the interest-due at nth coupon payment date. (b) A 20-year bond is issued today. The bond has redemption value C and is currently sold at P. You are given that The bond pays coupon semi-annually; The amount for accumulation of discount in 15th coupon is $194.82. The amount for accumulation of discount in 20th coupon is $306.69. Find the value of P-C. (Hint: Think about the premium-discount formula and figure out the two quantities that are required to find P-C.)

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