Business, 10.12.2021 19:10, fabiolabaritto
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with three years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: A. $969,555.18B. $509,016.47C. $686,768.25D. $807,962.65Based on your calculations and understanding of semiannual coupon bonds, complete the following statements:1. Assuming that interest rates remain constant, the bond's price is expected to 2. The bond described is selling at a 3. When valuing a semiannual coupon period N in the present value formula used to calculate the price of the bond is treated in terms of periods.
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Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the...
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