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The market discount rate of the bond

March 3, 2023 in /by

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

March 3, 2023 in /by

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

March 3, 2023 in /by

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 […]

The full price of the bond

March 3, 2023 in /by

The price of the bond was $1036.30 at the last coupon payment date and that 43 days have passed since the coupon payment, calculate the full price of the bond given the the market discount rate remains at 8%. (Assume 183 days per half year) Sample Solution