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

Sampling distribution, The heights of a large population of adult females w...

The heights of a large population of adult females who play basketball are normally distributed with a mean of 175cm and a standard deviation of 7.5cm. (a) what proportion of this

Estimate the cost of producing, Consider the manufacturing system presented...

Consider the manufacturing system presented in the article by Yu and Bricker (1993). The management would like to purchase new machine tools more reliable and more high accuracy

Construct the frequency distribution, 1) Here we are given a raw data and w...

1) Here we are given a raw data and we are supposed to construct the frequency distribution of that data and plot the histogram of it. The dataset contains the values from 1 to

Marginal and absorption costing, difference of them for covering the follo...

difference of them for covering the following: 1.purpose of reporting 2.FORMAT OF INCOME STATEMENT

Optics, A thief is running away in his car with a velocity of 20m/s.A polic...

A thief is running away in his car with a velocity of 20m/s.A police jeep is following him which is sighted by the thief in his rearview mirror, a convex mirror of focal length 10m

Average velocity profile-actual velocity profile, 1)  You are developing a ...

1)  You are developing a sampling protocol whereby you're going to insert a probe into a turbulent flow in a circular conduit of radius R. a. Using a description of a velocity p

Level of significance, Twenty years ago, entering male high school students...

Twenty years ago, entering male high school students of Central High could do an average of 24 pushups in 60 seconds. To see whether this remains true today, a random sample of 36

Domain, select and list five items used to sample the domain in childhood o...

select and list five items used to sample the domain in childhood obesity

Binomial probability distribution, if the probability of getting caught cop...

if the probability of getting caught copying someone else s exam is 0.2 find the probability of not getting caught in 3 attempts assume independence

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