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Calculate the yields to maturity of each bond

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Reference no: EM133163550

Question - The following is a list of the prices for zero-coupon bonds of various maturities. The par value of all bonds is $1,000.

Maturity (Years)

Price of the bonds ($)

1

943.40

2

898.47

3

836.54

4

765.20

Required -

a. Calculate the yields to maturity of each bond.

b. Calculate the forward rate for the second, third and fourth year.

c. Under the expectations theory, what yields to maturity does the market expect to observe on 1-year, 2-year and 3-year zero coupon bonds at the end of the first year respectively?

d. A coupon has a coupon rate of 10% and 2 years of maturity, what is the yield of this coupon bond?

Reference no: EM133163550

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