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The following is a list of prices for zero-coupon bonds with different maturities but same par...

The following is a list of prices for zero-coupon bonds with different maturities but same par value of $1,000: the 1-year zero bond sells at $925.15, the 2-year zero bond sells at $862.57, the 3-year zero bond sells at $788.66, and the 4-year zero bond sells at $711.00. You have purchased a 4-year maturity bond with a 9% coupon rate paid annually. The bond has a par value of $1,000.

What would be the price of the bond one year from now if the implied forward rates stay the same?

Solutions

Expert Solution

Price of Bond after 1 year = $1,005.36




jeff jeffy answered 1 year ago
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