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Author Question: Which of the following types of bonds, as characterized by a feature, by definition has two coupon ... (Read 21 times)

lracut11

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on: Jul 10, 2018
Which of the following types of bonds, as characterized by a feature, by definition has two coupon payments per year?
 
  A) Consol
  B) Semiannual
  C) Zero-coupon
  D) Putable

Question 2

RC Inc. just issued zero-coupon bonds with a par value of 1,000. If the bond has a maturity of 15 years and a yield to maturity of 10, what is the current price of the bond if it is priced in the conventional manner?
 
  A) 1,000
  B) 239.39
  C) 231.38
  D) This question cannot be answered because the coupon payment information is missing.


nickk12214

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: B

Answer to Question 2

Answer: C
Explanation: C) The conventional way to price a zero-coupon bond is to discount the par value assuming semiannual compounding. Zero-coupon Bond Price = = = 231.38.
MODE = END, P/Y = 2, C/Y = 2
INPUT 30 10 ? 0 -1,000
KEY N I/Y PV PMT FV
CPT 231.38


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