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SOA #100 (Things I don't get about bonds)
An investor owns a bond that is redeemable for 300 in seven years. The investor has just received a coupon of 22.50 and each subsequent semiannual coupon will be X more than the preceding coupon. The present value of this bond immediately after the payment of the coupon is 1050.50 assuming an annual nominal yield rate of 6% convertible semiannually.
Calculate X. (A)7.54 (B)10.04 (C) 22.37 (D)34.49 (E)43.98 I am not sure what to do with the 22.50. I presume I can use it to find out which coupon was just received. I also sense some amortization of premium and/or an arithmetically increasing coupon structure. But I am not sure where to begin. As I solved I found myself doing too much algebra. And then I ran out of time. Will someone point me in the right direction? 
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Last edited by Sullinator; 10292019 at 12:14 AM.. 
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*Edit Okay, clearly we have got fourteen coupon payments to go, I just didn't see the inference in the first sentence. I think I've got it now.
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Please forgive my ignorance as it far exceeds my knowledge. SOA FM questions and answers. VEE: Economics VEE: Accounting VEE: Statistics Job Last edited by Not Paul; 10292019 at 02:25 AM.. 
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#5




I missed the 14 payments of 22.5. Thanks for your input.

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