Mary is considering buying a four-year bond with coupon rate of 5%, face value $100 and annual coupons. What is the price of the four-year bond if according to the zero-coupon yield curve (assume all rates are EARS), the one-year spot rate is 4.3% the two-year spot rate is 3.6% the three-year spot rate is 3.4% the four-year spot rate is 3.0% Answer in $ and include two decimal places.
Mary is considering buying a four-year bond with coupon rate of 5%, face value $100 and annual coupons. What is the price of the four-year bond if according to the zero-coupon yield curve (assume all rates are EARS), the one-year spot rate is 4.3% the two-year spot rate is 3.6% the three-year spot rate is 3.4% the four-year spot rate is 3.0% Answer in $ and include two decimal places.
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:Mary is considering buying a four-year bond
with coupon rate of 5%, face value $100 and
annual coupons.
What is the price of the four-year bond if
according to the zero-coupon yield curve
(assume all rates are EARS),
the one-year spot rate is 4.3%
the two-year spot rate is 3.6%
the three-year spot rate is 3.4%
the four-year spot rate is 3.0%
Answer in $ and include two decimal places.
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