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kwesa corporation has a premium bond making semiannual payments . the bond pays a 9% coupon,...

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Finance

kwesa corporation has a premium bond making semiannual payments. the bond pays a 9% coupon, has a YTM of 7%, and has 13 years tomaturity. the modigliani company has a discount bond makingsemiannual payments. This bond pays 7%coupon, has YTM of 9%, andalso has 13 years to maturity. if interest rate remain unchanged,what do you expect the price of these bonds to be?

i) a year from now

ii) in 3 years

iii) in 8 years

iv) in 12 years

whats going on here

Answer & Explanation Solved by verified expert
3.6 Ratings (465 Votes)
i Price of Kwesa bond is calculated using PV function in Excel rate 7 2 converting annual YTM into semiannual YTM nper 12 2 12 years left to maturity with 2 semiannual coupon payments each year pmt 45 semiannual coupon payment face value coupon rate 2 100 9 2 fv 100 face value receivable on maturity PV is calculated to be 11606 Price of Modigliani bond is calculated using PV function in Excel rate 9 2 converting annual YTM into semiannual YTM nper 12 2 12 years left to maturity with 2 semiannual coupon payments each year pmt 35 semiannual coupon payment face value    See Answer
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