QUESTION 1 (10 marks) < Each of the following bonds has a $100 par value. Bond...
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QUESTION 1 (10 marks) < Each of the following bonds has a $100 par value. Bond Coupon interest rate Coupon payment Years to maturity Yield to maturity (% p.a.) (% p.a.) 4.25 Annual 15 3.50 Y 2.10 Semi-annual 15 3.50 R a) Calculate the value of Bond X (2 marks) b) Calculate the value of Bond Y (3 marks) c) Which bond has the higher interest rate risk and why? (5 marks) RV QUESTION 1 (10 marks) < Each of the following bonds has a $100 par value. Bond Coupon interest rate Coupon payment Years to maturity Yield to maturity (% p.a.) (% p.a.) 4.25 Annual 15 3.50 Y 2.10 Semi-annual 15 3.50 R a) Calculate the value of Bond X (2 marks) b) Calculate the value of Bond Y (3 marks) c) Which bond has the higher interest rate risk and why? (5 marks) RV
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