Question
In: Finance
The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3...
The current zero-coupon yield curve for risk-free bonds is as follows:
|
Maturity (years) |
1 |
2 |
3 |
4 |
5 |
|
YTM |
4.99% |
5.55% |
5.79% |
5.96% |
6.09% |
What is the price per $100 face value of a two-year, zero-coupon, risk-free bond?
Solutions
Expert Solution
r1 = 4.99%
r2 = 5.55%
FV = 100
Price = FV/(1 + r2) * 1/(1 + r1)
Price = 100/(1 + 0.0555) * 1/(1 + 0.0499)
Price = 94.7418285173 * 0.952471664
Price = $90.2389070583
jeff jeffy answered 3 years agoRelated Solutions
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