Examples 112What is the market price of a US Treasury bond that has a coupon rate of 9% p.a., a face value of $1000 and matures exactly 2 years from today if the interest rate is 10% p.a. compounded semi-annually?
What is the market price of a US Treasury bond that has a coupon rate of 9% p.a., a face value of $1000 and matures exactly 10 years from today if the interest rate is 10% p.a. compounded semi-annually?
What is the market price of a consol bond that has a coupon rate of 9% p.a. if the interest rate is 10% p.a. compounded semi-annually?()()()
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iiAnnwhereAnn
i
cFVi
FVic iPVnnn− + − = − + = +⎤ +⎥ ⎦⎡ ⎢ ⎣+
−=1 1 , * 1 1 111
c iPV=Multi-period deterministic cash flows: FI securities - Valuation