Question

Consider a bond with a coupon rate of 10% and coupon paid semi annually there are 20 years s to maturity and EAR is 8% what is the price of this bond in seven years

Answer 1

yes, you will. The beauty of a fixed-income security is that the investor can expect to receive a certain amount of cash, provided the bond or debt instrument is held until maturity (and its issuer does not default).

Most bonds pay interest semi-annually, which means you receive two payments each year. So with a $1,000 bond that has a 10% semi-annual coupon, you would receive $50 (5% *$1,000) twice per year for the next 10 years.

Explanation: