5) You are given the following information with respect to a bond with annual coupons: • (i) Face value: $10,000 (ii) term to maturity: 5 years, (iii) annual coupon rate: 4% You are also given that the one, two, three, four, and five year annual spot interest rates are 7%, 4%,6%, 5%, and 8%, Calculate • (a) the price of the bond (b) the yield rate of the bond.
5) You are given the following information with respect to a bond with annual coupons: • (i) Face value: $10,000 (ii) term to maturity: 5 years, (iii) annual coupon rate: 4% You are also given that the one, two, three, four, and five year annual spot interest rates are 7%, 4%,6%, 5%, and 8%, Calculate • (a) the price of the bond (b) the yield rate of the bond.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:5) You are given the following information with respect to a bond with annual coupons:
•
(i) Face value: $10,000
(ii) term to maturity: 5 years,
(iii) annual coupon rate: 4%
You are also given that the one, two, three, four, and five year annual spot interest rates are
7%, 4%,6%, 5%, and 8%,
Calculate
•
(a) the price of the bond
(b) the yield rate of the bond.
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