Use the following spot yield curve: Time ½ Spot Rate 1.0% I 1 1.5% 1½2 2.0% 2 2.5% 2½ 3.0% 3 4.0% 31/2 5.0% 4 6.0% A four year bond matures for 5,000 and has annual coupons of 125. The price of the bond is calculated using the spot yield curve. Determine the annual yield rate on the bond. (Round your answer to 4 decimal places.)
Use the following spot yield curve: Time ½ Spot Rate 1.0% I 1 1.5% 1½2 2.0% 2 2.5% 2½ 3.0% 3 4.0% 31/2 5.0% 4 6.0% A four year bond matures for 5,000 and has annual coupons of 125. The price of the bond is calculated using the spot yield curve. Determine the annual yield rate on the bond. (Round your answer to 4 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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