Suppose that 5-year government bonds are selling on a yield of 4 percent. Value a 5-year bond with a 6 percent coupon. Start by assuming that the bond makes annual coupon payments. Then rework your answer assuming that the same bond pays semiannual coupons and the yield refers to a semiannually compounded rate.© BrainMass Inc. brainmass.com March 4, 2021, 7:55 pm ad1c9bdddf
This solution calculates the value of the same bond with annual payments and then with semiannual payments.