What should be the price of the regular annuity

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Reference no: EM132853756

You observe the following three securities in the market:

Regular Annuity: Maturity = 5 years, Annual payments in arrears = $21.0, Current Price = $X (Solve for this)

Regular coupon bond: Maturity = 5 years, Face Value = $1,500,000, Coupon Rate = 7%, Current Price = $1398.81

Zero-coupon bond: Maturity = 5 years, Face Value = $500,000, Current Price = $332,520

What should be the price of the regular annuity, as per the no-arbitrage principle? In other words, what is the value of X?

Reference no: EM132853756

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