SOLUTION: Commercial Bond 1 in Market X: The other features of the Bond are as follows: Par value: $2000 Coupon rate: 10% Coupon rate compounding interval: semi-annual Current market

Algebra.Com
Question 1122777: Commercial Bond 1 in Market X:
The other features of the Bond are as follows:
Par value: $2000
Coupon rate: 10%
Coupon rate compounding interval: semi-annual
Current market rate of similar Bond: 11%
Year to maturity: 10 years
Commercial Bond 2 in Market Y
The other features of the Bond are as follows:
Par value: $2000
Coupon rate: 8%
Coupon rate compounding interval: monthly
Current market rate of similar Bond: 7%
Year to maturity: 10 years
(a) A recent University graduate John has joined your team. You have asked John to calculate the present value of both Commercial Bond 1 and 2. John submitted his calculations as follows: Present value of Commercial Bond 1 $1882.22 and 2 $2140.47. Are John’s calculations correct? Where has he gone wrong?
Answer by ikleyn(52794)   (Show Source): You can put this solution on YOUR website!
.
This site is for helping School students in Math.


Your problem is highly specialized from Finance.


Find another, more appropriate site, where to post it.



RELATED QUESTIONS

Assume that McDonald’s and Burger King have similar $1,000 par value bond issues... (answered by solver91311)
To expand its business, Kingston Outlet Factory would like to issue a bond with par value (answered by Theo)
Ok I have a problem that I believe I solved but I just want to be sure I am completing it (answered by stanbon)
Union Local School District has a bond outstanding with a coupon rate of 3.7% paid... (answered by jim_thompson5910)
Finding the interest rate for a given zero coupon bond (1 + I)^10 = 1000/463 Interest... (answered by ewatrrr)
1. ABC Corporation issues a bond which has a coupon rate of 10.20%, a yield to maturity... (answered by ikleyn)
11. Ten years ago the Jamaica Nice Company issued a 30-year bond with a $1,000 par value. (answered by CPhill)
Ten years ago the Jamaica Nice Company issued a 30-year bond with a $1,000 par value. to... (answered by CPhill)
. Calculate the fair present values of the following bonds, all of which pay interest... (answered by CPhill)