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

Logistic regression model, Model 1:  Let's consider the logistic regression...

Model 1:  Let's consider the logistic regression model, which we will refer to as Model 1, given by log(pi / [1-pi]) = 0.25 + 0.32*X1 + 0.70*X2 + 0.50*X3

Predetermined rates, #questKody Corporation uses a job-order costing system...

#questKody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates

Index numbers, various types of index numbers constructed in india ????

various types of index numbers constructed in india ????

Find out price, A pharmaceutical company is a monopoly in Alzheimer's disea...

A pharmaceutical company is a monopoly in Alzheimer's disease drugs and faces the following inverse demand curve: , where α is the level of advertising. Its marginal production

#tiMEDIANtle.., #quHOW TO MAKE ASSIGMENT ON MEDIANestion..

#quHOW TO MAKE ASSIGMENT ON MEDIANestion..

Time series analysis, what is the interpretation of plots in least square m...

what is the interpretation of plots in least square method

Definition of bonded warehouse, Bonded warehouse is a storage area under Cu...

Bonded warehouse is a storage area under Customs authority that is imported dutiable goods on which duty is unpaid and these are stored. Once the duty & other charges are paid the

Normal Random Variable, I need help with the following: Find the ...

I need help with the following: Find the following probabilities for the normal random variable Z: 1) P(Z>1.76) 2) P(Z 3) P(0.59=Z=2.41)

Probability, Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3...

Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3. (a) If A and B are independent then compute the probability that Both A and B happen

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