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

Calculate the probability of coin, Q1. If you throw a coin 5 times, what is...

Q1. If you throw a coin 5 times, what is the probability of: - throwing 5 heads - throwing 4 tails - throwing 3 heads and 2 tails Q2. Construct a tree diagram to verify your ans

Business tax, Maria runs a small business out of her home. She has expense...

Maria runs a small business out of her home. She has expenses of $2,000 per year and uses the cash basis method of accounting. Her only employee is her cousin who works for her pa

Barter system, Define the barter system with examples where payment is made...

Define the barter system with examples where payment is made in kind instead of cash. A barter system whereby the payment for purchases is made in kind instead of, in cash. i.e.

Standard costing, Standard costing In contemporary price sales, the idea...

Standard costing In contemporary price sales, the idea of documenting traditional expenditures was taken further, by assigning the organization''s set expenditures over a given

Determining the sample size for a confidence interval, 1. In your own words...

1. In your own words explain the difference between a point estimate and an interval estimate of a parameter? Which is better? Why?  2. What information is necessary to calculat

Compute the sample correlation matrix, 1 Compute SX; SXY ; and SY . > # Put...

1 Compute SX; SXY ; and SY . > # Put your R code here. 2 Compute the sample correlation matrix (q_p) between the X and Y variables. Test individual correlations for significance

Worksheet assignment help, Worksheet 5 Q1: For this question, use the p...

Worksheet 5 Q1: For this question, use the petrol consumption data from Worksheet 4, (included the data for worksheet 4)   8.9   10.4    6.3   8.9   10.8   10.8   8.2

International financial reporting standards-ifrs, IFRS: IFRS (Internationa...

IFRS: IFRS (International Financial Reporting Standards) is a set of accounting standards that were developed as global standard. The IFRS was developed by IASB (International Acc

Measure central tendency, 1. A researcher is comparing two middle school 7t...

1. A researcher is comparing two middle school 7th grade classes. One class at one school has participated in an arts program (involving putting on a musical play) which emphasized

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