Question 5: Four years ago, you bought some zero coupon bond (discount bonds) with face value of 1000 and yield to maturity's 8%. At that time, these bonds still had nine years to mature. Today, the yield to maturity of these bonds is 5%. You must sell these bonds because of your financial problems. What is your capital gain/loss? (Please note that the calculation period of compound interest is 6 months. )

Calculate how many of these bonds you bought four years ago: PV = (1000 * 8%/2)/(1+8%/2)1+(1000 * 8%/2)/(65438)

Calculate the price of the bonds you are selling now: PV = (1000 * 5%/2)/(1+5%/2)1+(1000 * 5%/2)/(1)

So your capital gains are: (781.20-493.63)/493.63 = 58%.

Question 6:

Five years ago, ABC Company issued some corporate bonds with an annual interest of 8,000 and a half-year payment of 4,000, with a term of 10 and a face value of 1 1,000,000. Recently, however, due to financial difficulties, ABC Company restructured its debts, and the annual interest will be paid in one lump sum. Future interest will be compounded at the annual rate of 6%. Due to the increased risk after reorganization, the discount rate of bonds will increase from the previous 7% to the current annual 15%. So what's the current price of this bond?

Now the selling price of bonds is the discounted value of bonds: PV =100000/(1+15%-6%) 5 = 649931.39.

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