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

Correlation, difference between positive and negative correlaiton

difference between positive and negative correlaiton

Classification of raw data with example tables, Classification of raw data ...

Classification of raw data on the basis of homogeneous characteristics

develop simulation model-compute average amount, Bob Smith recently comple...

Bob Smith recently completed his MBA and accepted a job with a computer company. To ensure that his retirement is comfortable, he intends to invest $3,000 of his salary into a tax

ANOVA, This problem will introduce the learner into a technique called Anal...

This problem will introduce the learner into a technique called Analysis of Variance. For this course we will only conduct a simple One-Way ANOVA and touch briefly on the importan

Variability, the purpose of measures of variability

the purpose of measures of variability

Allocation surrounding to accounts, Allocation surrounding to accounts An a...

Allocation surrounding to accounts An aspect of a lump-sum appropriation that is specific for expenses by particular government models and/or for particular requirements, actions,

Post-retirement health insurance, Post-retirement health insurance Some...

Post-retirement health insurance Some companies continue to provide insurance policy to workers after they have on. This one person benefit is considered to be part of the sett

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

Determine angle rounded to the nearest degree, Assume that the pulleys are ...

Assume that the pulleys are small frictionless pulleys. Three weights are supported as shown and have weights of W A = P5 N, W B = P6 N, and W C = P7 N.  Determine angle θ

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