A 2-year $100 par value bond pays 5% semi-annual coupons. The 6-month spot rate is 2%,...

A 2-year $100 par value bond pays 5% semi-annual coupons. The 6-month spot rate is 2%, the 1-year spot rate is 2.5%, the 18-month spot rate is 3% and the 2-year spot rate is 4%.

Determine the price of the bond

Determine the yield to maturity of the bond

Expert Solution

Price of the Bond is calculated as follows:

Formulas used in the excel sheet are:

Price of the bond is $ 103.99 and Annual YTM is 7.91%

jeff jeffy answered 2 years ago

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