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 a confidence interval for the population, A Shoe manufacturing co...

A Shoe manufacturing company designs a new shoe (Brand A) and it wanted to compare its fit with that of the leading brands in the market Nike and Reebok. 27 Customers were asked to

Describing univeriate data, X 420 610 625 500 400 550 650 480 565 Y 2.80 3...

X 420 610 625 500 400 550 650 480 565 Y 2.80 3.60 3.75 3.00 2.50 2.70 3.50 3.90 2.0 2.95 3.30 Calculate te covarience anf the correlatio coeficient. Comment on the relationship be

Probability, 1) A certain brand of batteries has a lifetime that has a norm...

1) A certain brand of batteries has a lifetime that has a normal distribution with a mean of 3,800 hours and a standard deviation of 390 hours. b) What lifetime should the manufac

Construct confidence interval for the true mean return, A researcher has ga...

A researcher has gathered data on the daily returns on a portfolio of call options over a recent 250-day period. The mean daily return has been 0.001 and the sample standard deviat

Define payroll withholdings, Define Payroll Withholdings The U. S. earn...

Define Payroll Withholdings The U. S. earnings tax system-as well as most condition earnings tax systems-requires business employers to hold paycheck taxation from their staff'

Mathematical theory in otc, All parts should be answered as briefly as poss...

All parts should be answered as briefly as possible (quality not quantity!). A few sentences will suffice. Just get your opinions across succinctly. Unnecessarily long answers will

Peanuts and cost accounting, EFF EX: Joe, you said you put in these peanuts...

EFF EX: Joe, you said you put in these peanuts because some people ask for them, but do you realise what this rack of peanuts is costing you? JOE: It ain''t gonna cost. ''sgonna be

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