3. What is the semi-annual coupon rate on the following government bonds? 3 YTM Semi-ann Face valu Maturity Price 4.00% 3.57% 100 10 95 YTM Semi-ann Face value Maturity Price 4.30% 4.53% 100 15 105 YTM 5% Semi-ann 5.00% Face valu 100 Maturity 25 Price 100 YTM Semi-ann Face value Maturity Price 6% 5.96% 100 30 97
3. What is the semi-annual coupon rate on the following government bonds? 3 YTM Semi-ann Face valu Maturity Price 4.00% 3.57% 100 10 95 YTM Semi-ann Face value Maturity Price 4.30% 4.53% 100 15 105 YTM 5% Semi-ann 5.00% Face valu 100 Maturity 25 Price 100 YTM Semi-ann Face value Maturity Price 6% 5.96% 100 30 97
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**Title: Calculating Semi-Annual Coupon Rates for Government Bonds**
**Introduction:**
This table helps illustrate the semi-annual coupon rates of various government bonds. It provides a comparison of semi-annual coupon rates alongside other crucial bond metrics such as Yield to Maturity (YTM), face value, maturity, and price.
**Bond Data:**
1. **Bond 1:**
- **YTM:** 4.00%
- **Semi-Annual Coupon Rate:** 3.57%
- **Face Value:** 100
- **Maturity:** 10 years
- **Price:** 95
2. **Bond 2:**
- **YTM:** 4.30%
- **Semi-Annual Coupon Rate:** 4.53%
- **Face Value:** 100
- **Maturity:** 15 years
- **Price:** 105
3. **Bond 3:**
- **YTM:** 5%
- **Semi-Annual Coupon Rate:** 5.00%
- **Face Value:** 100
- **Maturity:** 25 years
- **Price:** 100
4. **Bond 4:**
- **YTM:** 6%
- **Semi-Annual Coupon Rate:** 5.96%
- **Face Value:** 100
- **Maturity:** 30 years
- **Price:** 97
**Explanation:**
The data above includes a series of bonds with varying yields to maturity and durations. The semi-annual coupon rate is highlighted, showing the interest paid every six months. Longer maturities generally allow for assessing interest rate trends and their effects on bond pricing.
**Conclusion:**
Understanding these aspects is crucial for making informed investment decisions regarding government bonds. The semi-annual coupon rate, along with the YTM, provides insight into the bond's potential returns compared to its market price and duration.
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