Question

A $1000 par value bond has 8% semiannual coupons and is callable at the end of the 10th through the 15th years at par. (a) Find the price to yield 6% convertible semiannually. (b) Find the price to yield 10% convertible semiannually

ANSWER: A) 1148.77 (b) 846.28

Answer 1

(a)
A	B	C	D	E
137	1)	Year to maturity=(10*2)	20	Years
138		Coupon Rate=(8%/2)	4.0%
139		Coupon Amount($1000*4%)	40
140		Par value	1000
141		Yield to maturity=(6%/2)	3%
		Present Value	PV(D141,D137,D139,D140)
		Present Value	($1,148.77)
(b)
A	B	C	D
147		Year to maturity=(15*2)	30	Years
148		Coupon Rate=(8%/2)	4.0%
149		Coupon Amount=($1000*4%)	40
150		Par value	1000
151		Yield to maturity=(10%/2)	5%
		Present Value	PV(D151,D147,D149,D150)
		Present Value	($846.28)