QUESTION 11 . Practice finding Present Value for Semi-annual Bonds See Section 7-6 of the Textbook Consider corporate bonds with PMT, a coupon rate of 6% (the coupon rate is expressed as an annual number) that pay interest semi-annually (the nature of these interest payments determines the compounding frequency of the bond in this case it is semi-annual compounding) So we need to take the coupon rate and divide by 2 . N. 11 years to maturity (maturity means the bond contract is over this is provided in years, but we need the number of periodsso use years 2 for N . FV. a par value of $1,000 (this is what the bond is worth at maturity) - this is unaffected by semi-annual compounding . IY the market rate of interest on similar debt is 6% Interest rates are quoted as annual numbers, so we need the semi-annual rate, use rate / 2 for INY Find the value of these bonds (solve for PV) and round to the nearest dollar