In: Finance
Fill in all the remaining blanks in the table below and fill
out the appropriate formula each.
Residual maturity
Residual Maturity | Interest rate of Zero coupon bond | Price of Zero Coupon Bond | one-year intrinsic forward interest rate | par yield |
1 | 8.00% | |||
2 | 7.00% | |||
3 | 6.00% |
Residual Maturity | Interest rate of Zero coupon bond | Price of Zero Coupon Bond | one-year intrinsic forward interest rate | par yield |
1 | 8.00% | =1000/(1+8%)=925.26 | =((1+7%)^2/(1+8%)^1)-1=6.01% | 8% |
2 | 7.00% | =1000/(1+7%)^2=873.4 | =((1+6%)^3/(1+7%)^2)-1=4.03% | 7% |
3 | 6.00% | =1000/(1+6%)^3=839.6 | 6% |