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QUESTION THREE (a) Even though most corporate bonds in the World make coupon payments semiannually,...

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Finance

QUESTION THREE (a) Even though most corporate bonds in the World make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. A Zambian company issues a bond with a par value of K1,000, 15 years to maturity, and a coupon rate of 8.4 percent paid annually. If the yield to maturity is 7.6 percent, what is the current price of the bond? [10 marks] (b) A Japanese company has a bond outstanding that sells for 87 percent of its 100,000 par value. The bond has a coupon rate of 5.4 percent paid annually and matures in 21 years. What is the yield to maturity of this bond? [10 marks]

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