Compute the current price of the five zero-coupon bonds

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Suppose that the continuously compounded, annualized yields-to-maturity on 6m, 1y, 18m, 2y, 30m, and 3y zero-coupon bonds are currently 4.2%, 4.7%, 5.0%, 5.6%, 6.0%, and 6.2% respectively.

a) Compute the current price of the five zero-coupon bonds (expressed per $100 of face value).

b) If the two-year bond realizes a continuously compounded return of -6.20% from time 0 until time t1 = 1 year, what will this bond's semi-annually compounded return from t1 = 1 year to t2 = 2 years be?

c) Compute the current price and the annualized yield to maturity of a 3-year, 9% coupon bond paid semi-annually with a face value of $10,000.

Reference no: EM133114785

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