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

Compute the test statistic, Choose a variable and collect data consisting o...

Choose a variable and collect data consisting of at least 30 values. Before collecting the data, decide what a likely average might be, then complete the following: a. Write a b

Aggregate expenditure method, Problem Construct a consumer price index ...

Problem Construct a consumer price index for the information given by using  (i) Aggregate expenditure method, (ii) Family budget method. Commodities

Venn diagrams, how do i solve questions with venn diagrams

how do i solve questions with venn diagrams

Opertions research, meaning and definition of operations rsearch

meaning and definition of operations rsearch

Define accounting Actuarial basis , A basis used in processing the quantity...

A basis used in processing the quantity of advantages to be created regularly to a finance or consideration so that the complete advantages plus the complicated income thereon will

Linear modelling, what is a difference between a linear model and a linear ...

what is a difference between a linear model and a linear model

Standard deviation, define standard deviation. their purpose,uses,advantage...

define standard deviation. their purpose,uses,advantages nd disadvantages,examples ,formula for grouped and ungrouped.

6.2, comulativefrequencydistribution

comulativefrequencydistribution

Allowable moving costs , Allowable moving costs Except as mentioned in Sub...

Allowable moving costs Except as mentioned in Subsection 60.20.20 and within certain restrictions, allowable moving costs involve the prices associated with moving family products

Generally accepted accounting principles-gaap, Generally Accepted Accountin...

Generally Accepted Accounting Principles-GAAP:  GAAP is an Americanized term for the accounting standards and procedures that need to be followed by companies while compiling their

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