Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 10, Problem 20PS
Summary Introduction
To Discuss:
To fill in the table below for the following zero-coupon bonds, all of which have par values of $1000
| PRICE | MATURITY(YEARS) | YIELD TO MATURITY |
| $400 |
20 |
(a) |
| $500 |
20 |
(b) |
| $500 |
10 |
(c) |
| (d) |
10 |
10% |
| (e) |
10 |
8% |
| $400 |
(f) |
8% |
Introduction:
A bond is a security that creates an obligation on the issuer to make specified payments to the holder for a given period of time. The face value of the bond is the amount that the holder will receive on maturity along with the coupon rate which is also known as the interest rate of the bond.
A zero-coupon bond is a bond where at the time of maturity the face value is repaid.
Yield to maturity is termed as the discount rate which makes the present payments from the bond and its price as equal. In simple terms, it is the average
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Chapter 10 Solutions
Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 10 - Prob. 1PSCh. 10 - Prob. 2PSCh. 10 - Prob. 3PSCh. 10 - Prob. 4PSCh. 10 - Prob. 5PSCh. 10 - Prob. 6PSCh. 10 - Prob. 7PSCh. 10 - Prob. 8PSCh. 10 - Prob. 9PSCh. 10 - Prob. 10PS
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