with working out
Practice Question 1
1. What is the value of a 5-year 7% annual coupon bond when the discount rate is
A. 6%
B. 7%
C. 8%
D.Show that the results obtained above are consistent with the relationship between the coupon rate, discount rate, and price relative to par given in the text?
Practice Question 2
2. Calculate the price of a:
a. 4-year 10% annual coupon bond with an 8% discount rate.
b. 4-year 10% semi-annual coupon bond with an 8% discount rate
Practice Question 3
3. What is the value of a:
a. 5-year zero coupon bond with a par value of $1000 and an 8% discount rate?
b. Perpetuity which pays $1500 annually when the yield to maturity is 10%