Find out the present value, Basic Statistics

Assignment Help:

The present value (price) formula for a coupon bond is:

PV = C/(1+i) + C/(1+i)2 + ... + C/(1+i)n + F/(1+i)n

Part a

The present value (price) formula for a zero coupon bond is:

 PV = F/(1+i)n

Plugging in the given information,

 Price = $1000/(1+0.1)15 = $239.39

Thus the price of the fifteen-yr zero coupon bond is $239.39.

Part b

Semiannual coupon = 6%*$500/2 = $15

Plugging in the given information,

Price = $15/(1+(0.1/2)) + $15/(1+(0.1/2))2 +..... + $15/(1+(0.1/2)6 + $500/(1+(0.1/2)6 = $449.24

Thus the price of the three-yr semiannual 6% coupon bond is $449.24.


Related Discussions:- Find out the present value

Calculate profitability index of project, Your division has been allocated ...

Your division has been allocated $15M for capital projects for the coming year. You've been able to identify five potential projects, as outlined in the table below, each of which

Pie diagram, A survey was conducted among the residents of Pune City, its s...

A survey was conducted among the residents of Pune City, its suburbs and the Pune Cantonment area. The following three pie diagrams show their respective preferences for living in

Budgetary accounts, Budgetary accounts Accounts used to go through the ado...

Budgetary accounts Accounts used to go through the adopted budget into the all-purpose ledger as part of the administration control method of formal budgetary addition.

Explain correlation coefficient, Q. Explain Correlation Coefficient? A...

Q. Explain Correlation Coefficient? Ans. The strength of a linear correlation is determined by how precisely the y variable shifts as the x variable increases. The two pi

Business forecasting, Ask questionmethods of business forecasting #Minimum...

Ask questionmethods of business forecasting #Minimum 100 words accepted#

Cost, I am struggling in my cost accounting class and I need help

I am struggling in my cost accounting class and I need help

Collection of information, This methods implies the collection of inform...

This methods implies the collection of information by way of investigator own observation without interviewing the respondents. While the observational methods may be suitabl

financial performance using ratios, Write a report to an investor comparin...

Write a report to an investor comparing the performance by using the financial statements between two different companies

Find confidence interval, A sample of 40 golfers showed that their average ...

A sample of 40 golfers showed that their average on a particular course was 94 with a standard deviation of 6. a. Find the 95% confidence interval of the mean score for all golf

Angler survey, Angler survey A survey used by sport fishery managers t...

Angler survey A survey used by sport fishery managers to calculate the total catch, fishing effort and catch rate for the given body of water. For instance, the whole effort m

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd