Changes in Bond Values over Time Fill in the blanks




 Changes in Bond Values over Time Fill in the blanks


7-5 Changes in Bond Values over Time Fill in the blanks of the following sentence. (Hint: For the first blank, choose a different answer than “future” even though “future” is technically correct) The bond price gets closer to the parvalue as the life of the bond Increases 7-6-1 Bonds with Semiannual Coupons-The Basics A20-year bond with an 8% coupon pays a semi-annual coupon payment of$40 every 6 months. What is the price ofthe bond? The yield to maturity is 5% 7-6-2 Bonds With Semiannual Coupons-Effective Interest Rate What is the effective interest rate of a semiannual pay bond with a YTM or nominal yield of 8962 As the number of compounding periods increases, what effect does it have on the effective interest rate? 7-6-3 Bonds with Semiannu Coupons- Effective Yield with Call The price of a semiannual 10-year bond is S923. Its coupon rate is 4% The bond can be called in three years for $1,050. Calculate the YTCsoe and YTCrs (see PPT 7-33.) 7-7a Price Risk As the life of a bond increases, the price risk higher

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