Question

clara barnett, a fixed income analyst, wishes to assign a value to an illiquid bond issued by celadon ceramics. the semiannual coupon bond has a coupon rate of 7.50% and exactly 3 years until maturity. barnett has identified two comparable bonds with recent transaction data: comparable bond maturity yield to maturity a 2 years 6.87% b 5 years 7.19% using matrix pricing, the value of the celadon bond per 100 of par value is closest to: group of answer choices 99.57. 101.39. 101.15.

Answer 1

The maturity date for the semiannual coupon bond is 3 years, and the coupon rate is 7.50%. Two analogous bonds have been found by Barnett.

How do two bonds compare?

The "yield to maturity" must be calculated in order to compare various fixed-income securities. This combines the bond's purchase price and coupon rate, reflecting the investor's actual underlying interest rate of return.

Which two bond types are most prevalent?

Series EE Savings Bonds and I-bonds are two of the most popular varieties of US savings bonds. According to the Financial Industry Regulatory Authority, I-bonds are a popular safe investment product since they have "essentially no credit and default risk."

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