Question
In: Finance
The following table records current prices for zero-coupon bonds of various maturities (all securities have a...
The following table records current prices for zero-coupon bonds of various maturities (all securities have a face value of $1000):
Price ($)
Bond Maturity (Years) A 1 970.87
B 2 933.51
C 3 889.00
Use the prices to value a bond with a coupon rate of 7% per year, $100,000 face value, and three years remaining to maturity (annual coupon payments). The next coupon payment is one year away (i.e., at time 1).
Solutions
Expert Solution
=Coupon rate*Par*P1+Coupon rate*Par*P2+(1+Coupon
rate)*Par*P3
=7%*100000*970.87/1000+7%*100000*933.51/1000+(7%+1)*100000*889.00/1000
=108453.6600
jeff jeffy answered 2 years agoRelated Solutions
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table....
Suppose that the prices of zero-coupon bonds with various
maturities are given in the following table. The face value of each
bond is $1,000.
Maturity
(Years)
Price
1
$
925.93
2
853.39
3
782.92
4
715.00
5
650.00
a. Calculate the forward rate of interest for
each year. (Round your answers to 2 decimal
places.)
Maturity (Years)
Forward rate
2
%
3
%
4
%
5
%
b. How could you construct a 1-year forward
loan beginning in year 3?...
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table....
Suppose that the prices of zero-coupon bonds with various
maturities are given in the following table. The face value of each
bond is $1,000.
Maturity (Years)
Price
1
$
925.93
2
853.39
3
782.92
4
715.00
5
650.00
a. Calculate the forward rate of interest for
each year. (Round your answers to 2 decimal
places.)
b. How could you construct a 1-year forward
loan beginning in year 3? (Round your Rate of synthetic
loan answer to 1 decimal place.)
Face...
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the...
The following is a list of prices for zero-coupon bonds of
various maturities.
a. Calculate the yield to maturity for a bond
with a maturity of (i) one year; (ii) two years; (iii) three years;
(iv) four years. Assume annual coupon payments. (Do not
round intermediate calculations. Round your answers to 2 decimal
places.)
Maturity (years)
Price of Bond
1
$
978.43
2
924.97
3
840.12
4
784.39
b. Calculate the forward rate for (i) the second
year; (ii) the...
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the...
The following is a list of prices for zero-coupon bonds of
various maturities.
a. Calculate the yield to maturity for a bond
with a maturity of (i) one year; (ii) two years; (iii) three years;
(iv) four years. (Do not round intermediate
calculations. Round your answers to two decimal
places.)
Maturity (Years)Price of Bond YTM
1 $910.90
2 $907.97
3 $828.12
4 $768.49
b. Calculate the forward rate for (i) the
second year; (ii) the third year; (iii) the fourth...
The following is a list of prices for zero-coupon bonds of various maturities. Calculate the yields...
The following is a list of prices for zero-coupon bonds of
various maturities. Calculate the yields to maturity of each bond
and the implied sequence of forward rates. Maturity (Years) Price
of Bond
1 $917.43 YTM= IFR=
2 $826.51 YTM= IFR=
3 $737.96 YTM= IFR=
4 $653.06 YTM= IFR=
Below is a list of prices for $1,000-par zero-coupon Treasury securities of various maturities. An 11%...
Below is a list of prices for $1,000-par zero-coupon Treasury
securities of various maturities. An 11% coupon $100 par bond pays
an semi-annual coupon and will mature in 1.5 years. What should be
the YTM on the bond? Assume semi-annual interest compounding for
this question. Maturity (periods) Price of $1,000 par bond
1 943.4
2 873.52
3 770
Below is a list of prices for $1,000-par zero-coupon Treasury securities of various maturities. An 12%...
Below is a list of prices for $1,000-par zero-coupon Treasury
securities of various maturities. An 12% coupon $100 par bond pays
an semi-annual coupon and will mature in 1.5 years. What should be
the YTM on the bond? Assume semi-annual interest compounding for
this question. Maturity (periods) Price of $1,000 par bond 1 943.4
2 873.52 3 780
Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of...
Below is a list of prices for zero-coupon bonds of various
maturities.
Maturity (Years)
Price of $1,000 Par Bond
(Zero-Coupon)
1
$
978.14
2
893.66
3
807.34
a. A 9.7% coupon $1,000 par bond pays an annual
coupon and will mature in 3 years. What should the yield to
maturity on the bond be?
b. If at the end of the first year the yield
curve flattens out at 8.0%, what will be the 1-year holding-period
return on the coupon...
Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of...
Below is a list of prices for zero-coupon bonds of various
maturities.
Maturity (Years)
Price of $1,000 Par Bond
(Zero-Coupon)
1
$
945.80
2
877.23
3
803.34
a. A 4.8% coupon $1,000 par bond pays an annual
coupon and will mature in 3 years. What should the yield to
maturity on the bond be? (Round your answer to 2 decimal
places.)
b. If at the end of the first year the yield
curve flattens out at 8.4%, what will be...
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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Look up and use each of these Linux commands. (Each command will have two parts) Summarize...
- What was Lincoln 10 percent plan and what problems did it present?
- A cantilever beam 4m long carries a uniform load of 3.5 kN/m over a portion 1.5m...
- Our next optimization comes from using the brilliant Rabin-Karp substring matching algorithm (RK for short), invented...
- Give an example of an experiment to determine the focal length of a concave lens. (Note...
- Search the Internet to find (at least 2 websites) related to the general field of malware....
- Consider the following schema: Suppliers(sid, sname, address) Parts(pid, pname, color) Catalog(sid, pid, cost) write the following...
ADVERTISEMENT