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Compute the price of the bonds based on semi annual analysis

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Question - You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of '13 percent, which is paid semi annually. The yield to maturity on the bonds is 12 percent annual interest. There are 20 years to maturity.

Required -

a. Compute the price of the bonds based on semi annual analysis.

b. With 15 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds?

Reference no: EM133157410

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