Zero Coupon Pricing/Bond Pricing in General

[AJF]

Do you always assume semi annual periods unless otherwise stated?

 

[lev]

If it's a zero, I would automatically assume semi-annual coupons. If its a coupon bond, I would look for the word "semi-annual" in the problem. If there isn't one, I would assume annual coupon.

 

[jamespucyk]

I would assume Semi-Annual unless it's a stated annual. Most bonds are semi-annual pays, but they would probibly be clear on that on the exam.

 

[guest]

>> If it's a zero, I would automatically assume semi-annual coupons.

wouldn't zero mean no coupons at all ?

 

[lev]

Pardon, I mean semiannual compounding.

 

[c_hayhurst]

Default assumptions:

Zero-coupon bonds= semi-annual compounding
Coupon (interest-bearing, "regular", etc.) bonds= semiannual if talking about coupon payments, annual if talking about yield

 

[c_hayhurst]

Default assumptions:

Zero-coupon bonds= semi-annual compounding
Coupon (interest-bearing, "regular", etc.) bonds= semiannual if talking about coupon payments, annual if talking about yield

BTW, I just took my Series 7 a couple of months ago and it really helped me better understand how bonds work. A lot.