Assume all coupon rates are paid semi-annually. Use face value of $100. Assume today’s date is January 31, 2023…

Question:

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Assume all coupon rates are paid semi-annually. Use face value of $100.

Assume today’s date is January 31, 2023

Consider 6-month, 1-year, and 18-month spot rates of r(0.5) = 3%, r(1) = 4%, and

r(1.5) = 5%

Consider the following bonds:

Bond

A

B

C

Maturity

July 31, 2023

January 31, 2024

July 31, 2024

Coupon rate

5%

7%

10%

a) (1 point) Find the bond price of bonds A, B, and C.

b) (1 point) Calculate the yield to maturity for each of the bonds (A, B, and C).

c) (1 point) Find the price of Bond B on July 31, 2023, after the coupon is paid.

d) (1 point) Find the price of Bond C on July 31, 2023, after the coupon is paid.

e) (1 point) Find the price of Bond C on January 31, 2024, after the coupon is paid.

Expert Answer:

Answer rating: 100% (QA)

use the concept of present value and the given spot rates We ll calculate the present value of the future cash flows for each bond to find its price a

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