Question: 1 if you buy a semiannually compounded 5year corporate coupon...
1. If you buy a semi-annually compounded 5-year corporate coupon bond with a face value of $1000, coupon rate of 4%, and yield to maturity of 6%, then you know that
a)the fair price of the bond is less than $1000.
b)the coupon amount is $30.
c)both a) and b) are correct.
d)neither a) nor b) is correct.
2. Assuming 365 days in a year, if the annual interest rate is 10%, what is the present value of a $100 that you are going to receive 2-years from now with daily compounding?