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What is the value of a two-year, risk-free bond

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Reference no: EM133005204

Question - The (annual) yields on 1-year and 2-year, risk-free, zero-coupon bonds are 2.0% and 2.5%, respectively.

1. What are the values of $100 face amount of each these zero-coupon bonds?

2. What is the value of a 2-year, risk-free bond with a coupon rate of 5% (annual coupons) and a face amount of $100?

3. Given the value in part (b) above, what is the annual yield-to-maturity on this bond?

4. What is the value of a 2-year, risk-free bond with a coupon rate of 10% (annual coupons) and a face amount of $100?

5. Given the value in part (d) above, what is the annual yield-to-maturity on this bond?

Reference no: EM133005204

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