The following is a list of prices for zero-coupon bonds of various maturities. The face value is $1,000. Use your answers in part (a) to calculate the forward rates in part (b). Maturity (years) Price of Bond 1 $ 978.43 2 924.97 3 840.12 4 784.39 Required: 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.
The following is a list of prices for zero-coupon bonds of various maturities. The face value is $1,000. Use your answers in part (a) to calculate the forward rates in part (b). Maturity (years) Price of Bond 1 $ 978.43 2 924.97 3 840.12 4 784.39 Required: 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.
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
The following is a list of prices for zero-coupon bonds of various maturities. The face value is $1,000. Use your answers in part (a) to calculate the forward rates in part (b).
Maturity (years) | Price of Bond |
---|---|
1 | $ 978.43 |
2 | 924.97 |
3 | 840.12 |
4 | 784.39 |
Required:
-
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.
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