Assume that the current market rate

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Reference no: EM131047515

Assume that the current market rate is 3 percent. Calculate the returns an provide all relevant factors to compare between the three alternative below:

a) A 4 year gov bond initially sold to the public on the same date last year (the 1st coupon paid yesterday). Face value of the bond = 1,000 and its coupon rate is 4 percent, while the current price of the bond is at 880

b) A 3 year zero coupon gov bond initially sold to the public today. Face value is 1,000 and the bond is sold at 840

c) An insurance program with 3 yrs term to maturity. The premium payment is 860 for 2 yrs, the sum insured is 1000 , the cash return is 2 percent of the sum insured at the end of each year for 3 years and the extra cash return on the maturity date is 110 percent of the sum insured

Please show me the calculation.

Reference no: EM131047515

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