A ten-year USD100 par value bond pays 8% coupons semiannually. The bond is priced at USD118.20 to yield an annual nominal rate of 6% convertible semiannually. a. Calculate the redemption value of the bond. b. Calculate the book value of the bond at the end of 5th year.

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.