PVEL discounting for Semi-annual coupon bonds

CFA Level II Fixed Income
#1

So I ran across this problem asking me to calculate the PV of expected loss for a semi-annual coupon bond. In the question, it provides me this term structure:

Time to Cash Flow Risk-Free Spot Rate Credit Spread (%) 0.5 1.5% 0.20% 1 1.75% 0.25% 1.5 2.00% 0.30% 2 2.25% 0.35%

In the answer, it shows that the semi-coupon payments were all discounted with the whole risk-free rate and the other total yield (Rf + credit spread). My confusion is why was the Rf and the total yield was not divided in half before using it to discount? Shouldn’t we always divide the spot rates and total yield by whatever periodic payment frequency (i.e. semi, quarterly, etc) ?

#2

I think it’s OK because you multiply it with the time 0.5 and 1.5 and this way you deannualize it.

Or am I too tired?

#3

Does the problem specify whether the rates are effective annual or bond equivalent (semi-annual)?

#4

Moosey, you are right…not sure why I didn’t think of that… I guess I’m more tired than you are haha…

thx for the help