00:01
So here we want to calculate the zero prices for the given bonds or securities.
00:07
And the first two have zero coupons.
00:12
So that means that the price is actually the zero price.
00:16
So for a to zero price is the price given, 984 .024.
00:27
For b, also has a zero coupon.
00:30
So that zero price is the current price.
00:34
966 .128.
00:37
Then for c and d, we're going to first have to calculate the periodic coupon using the coupon rate.
00:50
Well, the coupon rate is annual, but the coupons are paid semi -annual.
00:59
So c, and it is semi -annual.
01:05
So we calculate that then.
01:08
Taken the coupon rate times the par value divided by two.
01:12
So here c is equal to, let's see here, 38 .75, divided by 2, 19 .375.
01:23
And for d, it is going to be 46 .25, divided by 2, which is 23 .125.
01:35
This is our face value.
01:38
Face value and i'm doing semi -annual so that means that my number of periods that i'm compounding or getting these coupons 18 months is three times six months so that is n is equal to three so the number of periods is the number of coupons you're going to get so this is three and here you're going to get four.
02:15
And let's see here.
02:20
This is our current price.
02:28
And then we're going to calculate the actual yield, semi -annual yield to maturity.
02:40
I'm going to call it r using the formula that p is equal to f divided by 1 plus r to the n plus.
02:49
The coupon times 1 minus 1 plus r to the negative n divided by r.
02:58
You can use a calculator or a computer to calculate r then, because we have all the variables there except for r.
03:09
So for c, my r is going to be, let's see here, i'm using a finance calculator.
03:15
I am putting in that my n is 3.
03:20
My interest rate is unknown...