Answer:
Filling the missing information:
Features IBM Coupon Bond AOL Coupon Bond
Face value (Par) $5,000 $5,000
Coupon Rate 9.5% 12.8%
Yield to maturity 6.5% 5.5%
Years to maturity 15 30
Price $6,410.40 $8,302.28
Explanation:
a) Data and Calculations:
Features IBM Coupon Bond AOL Coupon Bond
Face value (Par) $5,000 $5,000
Coupon Rate 9.5% ?
Yield to maturity 6.5% 5.5%
Years to maturity 15 30
Price ? $8,302.28
Features IBM Coupon Bond AOL Coupon Bond
Face value (Par) $5,000 $5,000
Coupon Rate 9.5% 12.8% ($640/$5,000 * 100)
Yield to maturity 6.5% 5.5%
Years to maturity 15 30
Price $6,410.40 $8,302.28
Price of IBM Coupon Bond:
N (# of periods) 15
I/Y (Interest per year) 6.5
PMT (Periodic Payment) 475
FV (Future Value) 5000
Results
PV = $6,410.40
Sum of all periodic payments $7,125.00
Total Interest $5,714.60
Coupon interest rate of AOL Bond:
N (# of periods) 30
I/Y (Interest per year) 5.5
PV (Present Value) 8302.28
FV (Future Value) 5000
Results
PMT = $640.27
Sum of all periodic payments $-19,208.06
Total Interest $5,905.78
Coupon interest rate = 12.8% ($640/$5,000 * 100)
