What is the price of annual-paying coupon bond

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Reference no: EM132025522

Spot rate of 1-year maturity is 6%, future spot rate of 1-year maturity one year from now is 7%, and future spot rate of 1-year maturity two years from now is 8%.

(a) What is the price of zero coupon bond with face value of $1000 with time to maturity of 3 years? What is the YTM of this bond? For the price, round up your answers to second decimal point (no numbers smaller than 1 cent), and for the YTM, round up your answers to the fourth decimal point. (If using percentages, round up to the second decimal point.)

2. What is the price of annual-paying coupon bond with identical features of zero coupon bond from Part (a) plus annual coupon rate of 10%? What is the YTM of this bond? For the price, round up your answers to second decimal point (no numbers smaller than 1 cent), and for the YTM, round up your answers to the fourth decimal point. (If using percentages, round up to the second decimal point.)

Reference no: EM132025522

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