Question

Jared purchased a 10-year $100 par value bond with semiannual coupons at a nominal annual rate of 5% convertible semiannually and nominal annual yield rate of 6% convertible semiannually.a. Calculate the book value of the bond immediately after the 4th coupon.b. Calculate the accumulation of discount in the 6th coupon.c. Calculate the interest portion of the 8th coupon.

Answer 1

a) The book value of the bond immediately after the 4th coupon:

It is the ending of the period book value from the for the fourth period above schedule = $93.72.

b) Accumulation of the discount in the 6th coupon:

It is the sum of principal portion for period 1 to 6 = 0.28 + 0.29 + 0.29 +0.30 + 0.31 + 0.32 = $1.79

c) Interest portion of the 8th coupon:

It is the interest portion for the 8th period = $2.84.

Step-by-step explanation:

DEtailed solution is attached below: