You purchased a bond on 12/5/2019 for $108 that makes semi-annual payments of $5 (annual coupon rate is 10%). The bond matures on 1/31/2029 and makes its final coupon payment on this date.

Question

Questions to answer:

Par value is 100. Assume the bond makes coupon payments every January 31st and July 31st.

#16) What was the yield to maturity of this bond on the date it was purchased?

#17) What was the bond's duration on the date it was purchased? #18) How much accrued interest did you pay on the bond? Use (Actual/Actual) to determine the fraction of the coupon paid.

Is this something you think you could answer? This is just a sample question from my final exam for financial modeling due today at 8pm. I could use a tutor to help me on Zoom or I will not do well. I hope you're around!

Answer 1

#16) the yield to maturity of this bond was approximately 4.3%.

#17) the bond's duration was approximately 7.4 years on the date it was purchased.

#18) the accrued interest paid on the bond was $4.90