Annual compounding and semiannual compounding

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(1) Eighteen years ago a firm issued $1000 par value bonds with a 6% annual coupon rate and a term to maturity of 30 years. Market interest rates have increased since then and similar bonds today would carry an annual coupon rate of 8%. What would these bonds sell for today if they made (a) annual coupon payments; and (b) semiannual coupon payments?

(2) You purchase a 25-year zero coupon bond for $450. What is the annual YTM on that bond at that time using (a) annual compounding, and (b) semiannual compounding?

Reference no: EM131819380

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