Business Finance Exercise

[pauloflu1992]

I am having some difficulties trying to solve this problem. It would be really nice if someone could help me solve it:

1. You buy in the secondary market 10.000 10-year bonds of the Spanish Government, issued 5 years ago, with a face value of 1,000€, and semi-annual coupons of 6.35% per annum.
   1. If the coupon rate for new issues 5-year Spanish Government bond is 4.05%, how much do you have to pay for your bond purchase?
   2. What can you say about the bond price compared with the par value? Explain why?

Thanks.

 

[Deleted member 4993]

I am having some difficulties trying to solve this problem. It would be really nice if someone could help me solve it:

1. You buy in the secondary market 10.000 10-year bonds of the Spanish Government, issued 5 years ago, with a face value of 1,000€, and semi-annual coupons of 6.35% per annum.
   1. If the coupon rate for new issues 5-year Spanish Government bond is 4.05%, how much do you have to pay for your bond purchase?
   2. What can you say about the bond price compared with the par value? Explain why?

Thanks.

Please read the post titled "Read before Posting".

We can help - we only help after you have shown your work - or ask a specific question (not a statement like "Don't know any of these")

Please share your work with us indicating exactly where you are stuck - so that we may know where to begin to help you.

 

[pauloflu1992]

Please read the post titled "Read before Posting".

We can help - we only help after you have shown your work - or ask a specific question (not a statement like "Don't know any of these")

Please share your work with us indicating exactly where you are stuck - so that we may know where to begin to help you.

Well do you know anyone that can help me in this exercise, because i really don't know where to start?

 

[Deleted member 4993]

Well do you know anyone that can help me in this exercise, because i really don't know where to start?

Do you know what is meant by "semi-annual coupons of 6.35% per annum" ? Please explain.

Do you know how to calculate present value and future value? Please explain.

Do you understand how answers to these questions are related to your problem at hand? Please explain.