Homework Answers
Let X be the Smei annual Coupon amount
| Period | CF | PVF @1.75% | Disc CF |
| 1-6 | X | 5.6490 | 5.6490X |
| 6 | $ 100.00 | 0.9011 | $ 90.11 |
| Price of Bond | 5.6490X + 90.11 | ||
Thus 5.6490X + 90.11 = 101.2
5.6490X = 101.2 - 90.11
= 11.09
X = 11.09 / 5.6490
= 1.96
Coupon amount per Anum = 1.96 * 2
= 3.93
Coupon Rate = Coupon Amount per anum / Par Vale
= $ 3.93 /$ 100
= 3.93%
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