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1- If interest paid quarterly, what is the input number for “m” in the bond price...

1- If interest paid quarterly, what is the input number for “m” in the bond price calculation formula where you calculate PMT= FV x Cr/m?

2- If interest paid monthly, what is the input number for “m” in the bond price calculation formula where you calculate PMT= FV x Cr/m?

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Answer #1

1- If interest paid quarterly, what is the input number for “m” in the bond price calculation formula where you calculate PMT= FV x Cr/m?

PMT = coupon amount. FV = Face Value, Cr = Coupon rate

The interest paid quarterly means the interest will be paid 4 times a year.

Thus m = 4

2- If interest paid monthly, what is the input number for “m” in the bond price calculation formula where you calculate PMT= FV x Cr/m?

PMT = coupon amount. FV = Face Value, Cr = Coupon rate

The interest paid monthly means the interest will be paid 12 times a year.

Thus m = 12

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