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Determine the purchase price of the bond

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Reference no: EM132472264

Consider a 2-year $3000 bond that's redeemable at par and pays semi-annual coupons at a rate of c(2)=7%.

Question (a) Suppose that the yield rate is 3.3% compounded annually. Determine:

  1. The purchase price of the bond. P= $
  2. The bond's duration to 3 decimals. D= years

Note: Use the purchase price to the closest cent in your duration calculation.

Question (b) Suppose that the yield rate is 3.3% compounded semi-annually. Determine:

  1. The purchase price of the bond.
  2. The bond's duration to 3 decimals. D= years

Note: Use the purchase price to the closest cent in your duration calculation.

Question (c) Suppose that the yield rate is 3.3% compounded continuously. Determine:

  1. The purchase price of the bond. P= $
  2. The bond's duration to 3 decimals.D= years

Reference no: EM132472264

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