Consider two bonds. The first is a 6% coupon bond with six years to maturity, and...

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Finance

Consider two bonds. The first is a 6% coupon bond with six yearsto maturity, and a yield to maturity of 4.5% annual rate,compounded semi-annually. The second bond is a 2% coupon bond withsix years to maturity and a yield to maturity of 5.0%, annual rate,compounded semi-annually.
1. Calculate the current price per $100 of face value of eachbond. (You may use financial calculator to do question 1 and 2, I'mjust unsure how to use it.)
2. Given the data for the first two bonds, now consider a thirdbond: a zero coupon bond with six years to maturity. Calculate theprice per $100 of face value of the zero coupon bond. Calculate theyield to maturity for the zero coupon bond. (Express the yield asannual rate, compounded semi-annually).
HINT: Use the Value Additivity principle to answer part c.Create a synthetic zero- coupon bond, that is, a portfolio of the6% coupon bond and the 2% coupon bond that has the same cash flowsas a 6-year, zero coupon bond.

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For both the bonds coupon is compounded semiannualya First bondAssuming Face value 100 Semiannual coupon 6 2 1003Yield to maturity 45Years to maturity 6 Number of coupon payment period 6 2 12Using excel Bond See Answer

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Consider two bonds. The first is a 6% coupon bond with six yearsto maturity, and a yield to maturity of 4.5% annual rate,compounded semi-annually. The second bond is a 2% coupon bond withsix years to maturity and a yield to maturity of 5.0%, annual rate,compounded semi-annually.1. Calculate the current price per $100 of face value of eachbond. (You may use financial calculator to do question 1 and 2, I'mjust unsure how to use it.)2. Given the data for the first two bonds, now consider a thirdbond: a zero coupon bond with six years to maturity. Calculate theprice per $100 of face value of the zero coupon bond. Calculate theyield to maturity for the zero coupon bond. (Express the yield asannual rate, compounded semi-annually).HINT: Use the Value Additivity principle to answer part c.Create a synthetic zero- coupon bond, that is, a portfolio of the6% coupon bond and the 2% coupon bond that has the same cash flowsas a 6-year, zero coupon bond.