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Calculate the market price of the bond

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Question 1: You just purchased a 20-year semi-annual coupon bond with a par value of $1,000 and a coupon rate of 7.5%. The nominal yield to maturity is 8.5% per annum. Calculate the market price of the bond.

Question 2: Three years later, immediately after receiving the sixth coupon payment, you sell the bond to your best friend. Your best friend's nominal yield to maturity is 9% per annum. Calculate the price paid by your best friend.

Question 3: Write down an equation that can be solved to find the return as a nominal annual rate compounding half-yearly on your investment, assuming you sold the bond to your best friend as described in part d). You do NOT need to solve this equation.

Reference no: EM133062511

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