You have estimated spot rates as follows: r1= 1.5%, r2= 1.8%, r3= 2.1%, r4= 2.3%, r5= 3.5%, r6= 4.5%. Calculate...

You have estimated spot rates as follows:

r₁= 1.5%, r₂= 1.8%, r₃= 2.1%, r₄= 2.3%, r₅= 3.5%, r₆= 4.5%.

Calculate the price of bond with an annual coupon rate of 4.5% and six years to maturity. Face value of the bond is $1000.

$1011.5

$1050.5

$1000

$1032.5

$1025.5

Expert Solution

Ans is -$ 1011.5

Calculations-

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jeff jeffy answered 1 year ago

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You have estimated spot rates as follows: r1= 1.5%, r2= 1.8%, r3= 2.1%, r4= 2.3%, r5= 3.5%, r6= 4.5%. Calculate...

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