4-10 Bond pricing Example(continued) Q: How did the calculation change, given semi annual coupons versus annual coupon payments ie periods Discount rate Paying coupons twice a Since the time periods are year, instead ofonce now halt years, the doubles the total number of discount rate is also cash flows to be discounted changed from the annual in the Py formula rate to the half year rate Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 4- 10 Irwin/McGraw-Hill Bond Pricing Example (continued) Q: How did the calculation change, given semi￾annual coupons versus annual coupon payments? Time Periods Paying coupons twice a year, instead of once doubles the total number of cash flows to be discounted in the PV formula. Discount Rate Since the time periods are now half years, the discount rate is also changed from the annual rate to the half year rate