The bond should be trading at

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A 7% annual fixed coupon bond has 3 years to maturity.Given the following spot rates, calculate the price (per 100 par) that the bond should be trading at. Spot Rates1 yr: 6.6%2 yr: 7.1%3 yr: 7.3% Sample Solution

The market discount rate of the bond

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A $1000 par 10% semi-annual fixed coupon bond with has exactly 2 years to maturity and the coupon has just been paid. The market discount rate of the bond is 8%. Calculate the price of the bond. Sample Solution

Bonds should Kennedy choose

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Kennedy is choosing between bonds A and B. Both bonds have the same time to maturity and are trading at the same yield. Bond A has a lower coupon rate while Bond B has a higher coupon rate. Which of the 2 bonds should Kennedy choose, given that he has a preference for a bond […]

The fair value of a BB-rated bond

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An analyst wishes to determine the fair value of a BB-rated bond that is not publicly traded. The $1000 par bond has 3 years to maturity, and annual coupon of 7%. The analyst has found 2 comparable BB-rated bonds to perform a matrix pricing to determine the bond’s value. Comparable Bond A (5 years to […]