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A 5-year government bond has a face value of £1,000 and an annual nominal coupon
rate of 8%. Assume that the relevant nominal market interest rate (annualized) is equal
to 10%. The coupon payments are made quarterly.
(a) Calculate the present
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Solved in 3 steps
I meant I think the answer for present value is wrong, when I solve it on excel it gives me a different answer.
by Bartleby ExpertI think the answer for the effective market interest rate is wrong. Can you check it for me please? Because it is 5 years bond and if there is quarterly interest payment, should "n" so, number of periods not be 20 instead 4?
by Bartleby Expert- A 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.A bond has 10 years until maturity, a coupon rate of 8.9%, and sells for $1,110. Interest is paid annually. (Assume a face value of $1,000.) What will be the rate of return on the bond?A 10-year government bond has a face value of £100 and an annual coupon rate of 5%. Assume that the interest rate is equal to 6% per year. (a) Calculate the bond’s present value if it pays the interest annually, and also the present value if it pays semi-annually. (b) Calculate the market price of the bond when the interest rate changes to 8% please explain it on a paper with formula, not by excel.
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