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

F2 test distributed populations, What is F2 Test, These tests were based o...

What is F2 Test, These tests were based on the assumption that the samples were drawn from normally distributed populations, or more accurately that the sample means were normally

one-way anova and hypothesis , Suppose we wanted to compare the somatic co...

Suppose we wanted to compare the somatic complaints (as measured on a scale known as the Physical Symptom Survey or PSS) of three groups of people; nonsmokers, smokers, and people

Conduct all steps of the hypothesis test, The owner of Big Fish supermarket...

The owner of Big Fish supermarket was reviewing some data from a research report on the type of advertisements in the local paper that are most effective.  Three types of ads (big

Topic 4 Anova excel worksheet, systolic blood pressure in different age gr...

systolic blood pressure in different age groups. the following table contains a random sample of 40 women partitioned into three groups...

Bad debt reserve, Explain definition of bad debt reserve and provision in t...

Explain definition of bad debt reserve and provision in terms of accounts receivable likely to be uncollected. Bad debt reserve provision Bad debt reserve provision is a amount

Determine the probability, Question 1: A mail-order firm has a circular...

Question 1: A mail-order firm has a circular which elicits a 10% response rate. Suppose 20 of the circulars are mailed as a market test in a new geographic area. Assuming that

Tchebycheffs theorem, Tchebycheffs theorem As we all know standard deviati...

Tchebycheffs theorem As we all know standard deviation is a most widely used measure of variation. It has certain mathematical properties that facilitate development of statistica

Characteristics of statistics, Mention the characteristics of Statistics. E...

Mention the characteristics of Statistics. Explain any two applications of Statistics.

Decision-making, 'Statistics is the backbone of decision-making'. Comment.

'Statistics is the backbone of decision-making'. Comment.

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