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How much money will this bond pay out in 6 months

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Reference no: EM133122636

QUESTION 1

Suppose you buy a 1yr Treasury bill with a face value of $1,000 and a coupon rate of c = 5%. The 6 month zero rate is 4% per year. The 1 year zero rate is 4.4% per year.

a) How much money will this bond pay out in 6 months?

QUESTION 2

b) How much money will this bond pay out in 1 year?

QUESTION 3

c) How much would you pay today in order to receive $1 in 6 months given the prevailing zero rates?

QUESTION 4

d) How much would you pay today in order to receive $1 in 1 year given the prevailing zero rates?

QUESTION 5

e) How much did you have to pay to purchase the 1 year Treasury bill today

Reference no: EM133122636

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