INV3 P1c Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? If the liquidity preference theory is correct and you believe that the liquidity premium is 1 percent, what is the market expectation of the price that bond #4 will sell for next year?
INV3 P1c Bond # 1 2 3 4 1 - year strip bond 2- year strip bond 2-year 6% coupon bond 2-year 7% coupon bond Purchase Price for the bond) 950 ? ? ? Year 1 cash flow 1000 0 60 70 Year 2 cash flow 0 1000 1060 1070 Yield to Maturity ? ? 5.50% ? If the liquidity preference theory is correct and you believe that the liquidity premium is 1 percent, what is the market expectation of the price that bond #4 will sell for next year?
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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Question
INV3 P1c
|
Bond # |
1 |
2 |
3 |
4 |
|
|
1 - year strip bond |
2- year strip bond |
2-year 6% coupon bond |
2-year 7% coupon bond |
|
Purchase Price for the bond) |
950 |
? |
? |
? |
|
Year 1 cash flow |
1000 |
0 |
60 |
70 |
|
Year 2 cash flow |
0 |
1000 |
1060 |
1070 |
|
Yield to Maturity |
? |
? |
5.50% |
? |
If the liquidity preference theory is correct and you believe that the liquidity premium is 1 percent, what is the market expectation of the
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