Problem
Bond Theory: In 2000, JP Morgan Chase issued a bond with a face value of $100 dollars and an annual coupon of 4.5%. The maturity date on the bond was 2015.
i. Calculate the coupon payment.
ii. Suppose you bought the bond the day it was issued and then decided to sell the bond in 2012. Assuming a discount rate of 2.5%, how much would you have sold the bond for?
iii. Calculate the total interest earned from buying the bond in 2000 and then selling it in 2012. Make sure to account for the sale of the bond in your interest calculation.