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
Related questions
Question

Transcribed Image Text:The following is a list of prices for zero-coupon bonds of various maturities.
a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual
coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Maturity (Years)
1
2
3
4
Maturity (years)
1
2
3
4
Maturity (Years)
2
3
4
$
$
$
$
b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. (Do not
round intermediate calculations. Round your answers to 2 decimal places.)
$
$
$
Price of Bond
983.40
918.47
867.62
774.16
Price of Bond
$983.40
918.47
867.62
774.16
Price of Bond
YTM
918.47
867.62
774.16
%
%
%
%
Forward Rate
%
%
%
#
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