In: Finance
A 3-year $100 par value bond pays 9% annual coupons. The spot
rate of year 1 is 6%, the 2- year spot rate is 12%, and the 3-year
spot rate is 13%.
a) Determine the price of the bond
b) Determine the yield to maturity of the bond
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%.
c) Determine the price of the bond
d) Determine the yield to maturity of the bond