Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a coupon of 3.5% if it is currently selling at par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 3.5% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Economy Boom Normal Growth Recession Probability 0.25 0.55 0.20 YTM 8.0 % 6.0 % 4.0 % Price Capital Gain Coupon Interest HPR % % %
Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a coupon of 3.5% if it is currently selling at par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 3.5% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) Economy Boom Normal Growth Recession Probability 0.25 0.55 0.20 YTM 8.0 % 6.0 % 4.0 % Price Capital Gain Coupon Interest HPR % % %
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...
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![Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a coupon of 3.5% if it is currently selling at
par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 3.5%
coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to
enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round
your answers to 2 decimal places.)
Economy
Boom
Normal Growth
Recession
Probability
0,25
0.55
0.20
YTM
8.0 %
6.0 %
4.0 %
Price
Capital Gain
Coupon
Interest
HPR
%
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe64595a8-2d67-4470-aa35-13ce814c5321%2F030941ee-3bdb-44cb-9609-393fce0d0360%2Fhs89e6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a coupon of 3.5% if it is currently selling at
par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 3.5%
coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to
enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round
your answers to 2 decimal places.)
Economy
Boom
Normal Growth
Recession
Probability
0,25
0.55
0.20
YTM
8.0 %
6.0 %
4.0 %
Price
Capital Gain
Coupon
Interest
HPR
%
%
%
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