Solution Library

Calculation Of Bond Rates At Par

Question

Calculate the price of the following instruments, showing all work:

Nominal

2500

100

1000

Coupon(%)

6%

6%

10%

Maturity (years)

4

3

2

Payment frequency

ANN

SEMI ANN

ANN

Discount rate

3%

6%

11%

Which bond trades at par?

Having identified the appropriate bond, use it’s parameters to answer the following questions:

What will be the price of this bond if the discount rate increases by 1%?

What will be the price of this bond if the discount rate decreases by 1%?

 

Summary

The question belongs to Finance and it discusses about calculating bond trades at par and the price if bond discount rates increase and decrease.

Total Word Count NA

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Comments

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    Giuseppe

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