Question

The function s(t) = 0.02 + 0.004t gives the effective annual rate of a zero coupon...

The function s(t) = 0.02 + 0.004t gives the effective annual rate of a zero coupon bond of maturity t, with t in years. Find the price of a 2 year coupon bond with semiannual coupons of 6% and a face/redemption value of $700,000.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
s(t) = 0.02 + 0.004t
Bond =
N= 2 years
Coupon Rate = 6%
Face Value = 700000
Price of a bond = PV of Cashflows
Time Rate Cashflows PV Factor Pv of CF
a b c d = 1/(1+Rate)^t e= d x c
0.5 0.022 21000 0.989178 20772.74
1 0.024 21000 0.976563 20507.81
1.5 0.026 21000 0.96223 20206.83
2 0.028 21000 0.946267 19871.61
2 0.028 700000 0.946267 662387
743746
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate...
All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate is 4%. The price of a two-year 3% coupon bond with the face value of $1,000 is $ …………[A}………… (accuracy to one cent) and its yield to maturity is ………{B}………………. percent (enter 3.65% as 3.65 not 0.0365, accuracy at least to two decimals): All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate is 4%. The price of...
A $1000 20-year bond with 6% annual coupons is bought to yield an annual effective rate...
A $1000 20-year bond with 6% annual coupons is bought to yield an annual effective rate of 6%. If the write-up in the 4th coupon is $5, find the redemption value. Can someone please explain this step by step?
Suppose a 5-year bond with a 5% coupon rate, semiannual coupons and a face value of...
Suppose a 5-year bond with a 5% coupon rate, semiannual coupons and a face value of $1000 has a yield to maturity of 8% APR. What is the bond’s yield to maturity expressed as an effective semi-annual rate? What is the bond’s yield to maturity expressed as an effective annual rate (EAR)? What is the price of the bond? If the bond’s yield to maturity changes to 5% APR, what will the bond’s price be?
14)Find   the   bond   yield   as   an   effective   annual   rate for   a   bond   with   annual   coupon   of&nbs
14)Find   the   bond   yield   as   an   effective   annual   rate for   a   bond   with   annual   coupon   of   $200,   Face   value   of   $1000,   and   maturity   in   3   years where   the   spot   rates   are   as   follows.   Term to   maturity Spot   Rate One   year   from   today,   r1 5% Two   years   from   today,   r2 6% Three   years   from   today,   r3 7% a) 3.334% b) 3.395% c) 6.578% d) 6.789% e) 13.578%
PLEASE PUT THE FORMULA OF EXCEL. THANK YOU You find a zero coupon bond with a...
PLEASE PUT THE FORMULA OF EXCEL. THANK YOU You find a zero coupon bond with a par value of $10,000 and 17 years to maturity. The yield to maturity on this bond is 4.9 percent. Assume semiannual compounding periods. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d6 Settlement date: 1/1/2000 d7 maturity date:1/1/2017 d8: coupon rate: 0.00% d9: coupons per year: 2 d10: redemption value:...
All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate...
All rates are annual. The one-year zero coupon rate is 3%. The two year zero-coupon rate is 3.5%. The three year zero-coupon rate is 3.25%. The price of a three-year 3% coupon bond with the face value of $1,000 is $ ………{8}…………… (accuracy to one cent) and its yield to maturity is …………{9}………….. percent (enter 3.65% as 3.65 not 0.0365, accuracy at least to two decimals) All rates are annual. The one-year zero coupon rate is 3%. The two year...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity if the required return on these bonds is 3%? Consider a bond with par value of $1000, 25 years left to maturity, and a coupon rate of 6.4% paid annually. If the yield to maturity on these bonds is 7.5%, what is the current bond price? One year ago, your firm issued 14-year bonds with a coupon rate of 6.9%. The bonds make semiannual...
1. Maturity (years) = 5 Face Value = $1,000 Coupon Rate = 3.00% Price = $900...
1. Maturity (years) = 5 Face Value = $1,000 Coupon Rate = 3.00% Price = $900 Coupon (Annual) What is the YTM (annual) of the above bond? A 5.38% B 5.30% C 5.33% D 4.80% E 5.36% 2. Consider a bond with the following features: Maturity = 7 years Face value = $1,000 Coupon rate = 4% Semiannual coupons Price = $993 What is this bond's YTM stated as an annual rate? A 3.2500% B 4.1161% C 2.0581% D 6.500%
You are given the following information about two annual- coupon bonds, each with a face and...
You are given the following information about two annual- coupon bonds, each with a face and redemption value of $1,000 and each 3 years in length: - Bond A: A 3- year 6% annual coupon bond with a price of $955.57. - Bond B: A 3- year 8% annual coupon bond with a price of $1,008.38. Using this data, find the annual yield on a 3- year zero- coupon bond.
A 10 year annual coupon bond has a modified duration of 7.876 years based on its...
A 10 year annual coupon bond has a modified duration of 7.876 years based on its 4% annual effective yield to maturity. The bonds redemption value is the same as its face value of $1000. if the bonds annual coupon rate were increased by 1% what would be the new purchase price assuming the same old rate of 4%
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT