You're given the following data. (Coupons are paid annually.) Coupon Maturity (years) Price (decimal) 6% 96.20 8% 3.0 3.0 101.43 Which of the following is true? (Here, b(0,3) is a zero coupon bond with face value $1 and maturity 3 years.) O a. b(0,3) = 0.8061 O b. None of the other answers is true. O c. Not enough information. O d. b(0,3)=0.8059 O e. b(0,3)= 0.8051

You're given the following data. (Coupons are paid annually.) Coupon Maturity (years) Price (decimal) 6% 96.20 8% 3.0 3.0 101.43 Which of the following is true? (Here, b(0,3) is a zero coupon bond with face value $1 and maturity 3 years.) O a. b(0,3) = 0.8061 O b. None of the other answers is true. O c. Not enough information. O d. b(0,3)=0.8059 O e. b(0,3)= 0.8051

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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Consider the market rates for the maturities 1, 2, and 3 years respectively in the table below. What is the price of a 3-year bond with annual payments, coupon rate equal to 9.50% and face value equal to $68,000. Answer with two decimal digits accuracy. Example: 74929.05 t 1 2 3 R(0,t) 1.95 2.90 4.40 Blank Excel Worksheet Your Answer: Answer
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Price $983.78 865.89 797.92 732.00 660.24 Required: a. Calculate the forward rate of interest for each year. b. How could you construct a 1-year forward loan beginning in year 3? c. How could you construct a 1-year forward loan beginning in year 4?
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