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

Analyze anova , A nurse researcher is investigating the effect of timing of...

A nurse researcher is investigating the effect of timing of standard pain control interventions on severity of pain in adolescents with sickle-cell disease.  She establishes three

Question, #quea national poll of 1836 respondents indicated that 36% suppor...

#quea national poll of 1836 respondents indicated that 36% support the NDP. Test whether this is sufficient evidence to show that the NDP support has increased since the election.

Angular histogram, Angular Histogram A method or technique for displayin...

Angular Histogram A method or technique for displaying the circular data, which involves the wrapping of the usual histogram around a circle. Each bar in the histogram is center

Analysis and interpretation business report, Case Study. Using the data, pr...

Case Study. Using the data, prepare a report that analyses the profitability, liquidity and solvency of a Accessorize Pty Ltd and help the owner to decided whether to purchase the

Conceptual structure of financial, conceptual structure of financial In...

conceptual structure of financial In financial accounting, There were many breaks in the conceptual structure of individual forums for example both the forums hadn't conducted

Detemine lambda , A.  A computer rejuvenation facility receives systems fro...

A.  A computer rejuvenation facility receives systems from the fleet at 24 systems/day (assume this is a Poisson process).  It takes the triage function 30 minutes (assumed exponen

Why is an increase in inventory shown as a negative amount?, Why is an incr...

Why is an increase in inventory shown as a negative amount? A rise in stock indicates that a company has purchased more goods than it has sold. Increasing stock requires a money

Oecd database exercise , For this second assignment you will have to use th...

For this second assignment you will have to use the OECD database to investigate possible changes in the policy preferences of Western welfare states. You have to develop (i) an in

Systematic sampling, Where an element of randomness is introduce by suing r...

Where an element of randomness is introduce by suing random numbers to pick up the unit with which to start this process of sampling is known as systematic sampling.

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