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Investment banks will oftentimes "split" the interest andprincipal payments on US governme

Investment banks will oftentimes "split" the interest andprincipal payments on US governme

Investment banks will oftentimes "split" the interest andprincipal payments on US government bonds into two parts and selleach part separately. Consider a vanilla government bond with 30years to maturity, a coupon rate of 10 percent, a face value of$5,000, and semi-annual coupon payments. What is the present valueof the interest payments on this bond (not including any principalpayments) if the required rate of return is 12 percent peryear?

Abhinav 04-Dec-2019

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