Determine the price of the bond that pays coupons annually

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Suppose that, several years ago, the Canadian government issued three very similar bonds; each has a $1,000 face value and a 9-per cent coupon rate and will mature in 4 years. The only difference between the bonds is the frequency of the coupon payments. Assume the market yield is now 6.7 per cent.

a) Determine the price of the bond that pays coupons annually. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 1564.25.)

b) Determines the price of the bond that pays coupons semi-annually. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 1564.25.

C)Determine the price of the bond that pays coupons monthly. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 1564.25. Round intermediate calculations to 6 decimal places, e.g. 1.251246.)

Reference no: EM132969550

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