Q1：What is the cash flow of a 8-year bond that pays coupon interest semiannually, has a coupon rate of 6%, and has a par value of $100,000?

To calculate the cash flow of an 8-year bond that pays coupon interest semiannually, we need to determine the coupon payment and the total cash flow over the life of the bond.

1. Coupon Payment Calculation:

   • Par Value (Face Value) = $100,000
   • Coupon Rate = 6%
   • Since the bond pays interest semiannually, we divide the coupon rate by 2 and multiply the par value by this rate to find the semiannual coupon payment.

   $\text{Semiannual Coupon Payment} = \left(\frac{6\%}{2}\right) \times 100,000 = 0.03 \times 100,000 = 3,000$

2. Total Cash Flow Calculation:

   • The bond has a total of 8 years, and since it pays interest semiannually, there will be a total of $8 \times 2 = 16$ coupon payments.
   • The total cash flow from the coupon payments over the life of the bond is:

   $\text{Total Cash Flow from Coupons} = \text{Semiannual Coupon Payment} \times \text{Number of Payments} = 3,000 \times 16 = 48,000$

3. Final Cash Flow:

   • At the end of the 8 years, the bond will also pay back the par value of $100,000. Therefore, the total cash flow from the bond will be the sum of the total coupon payments and the par value.

   $\text{Total Cash Flow} = \text{Total Cash Flow from Coupons} + \text{Par Value} = 48,000 + 100,000 = 148,000$

In summary, the total cash flow of the bond over its 8-year life is $148,000.