Suppose that the continuously compounded zero rates are listed in the table below:   Maturity  (Months)   Zero Rate  (%) 6 2.1 12 2.9 18 3.2 24 3.6 30 4.2 Estimate the price of a bond with a face value of $100 that will mature in 30 months and pays a coupon of 7% per annum semiannually. (Required precision: 0.01 +/- 0.01)

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
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Suppose that the continuously compounded zero rates are listed in the table below:

  Maturity  
(Months)
  Zero Rate  
(%)
6 2.1
12 2.9
18 3.2
24 3.6
30 4.2

Estimate the price of a bond with a face value of $100 that will mature in 30 months and pays a coupon of 7% per annum semiannually.

(Required precision: 0.01 +/- 0.01)

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