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

Stat 2331 intro, Textbook The basic practice of statistics, 5th Edition b...

Textbook The basic practice of statistics, 5th Edition by David S. Moore; Freeman EX:14.37, 14.38, 14.39, 17.5, 17.28a

Education , what are the aims of education

what are the aims of education

Inventory control, Inventory control Inventory Control is the guidance of ...

Inventory control Inventory Control is the guidance of provide, storage and convenience of items to ensure an adequate provide without excessive oversupply. It can also be known a

#measures of central tendency, #what is the importance of measures of centr...

#what is the importance of measures of central tendency to Human resource management

Managerial, Manchester Custom Fabricating Company uses a job order system. ...

Manchester Custom Fabricating Company uses a job order system. At the beginning of May, Manchester had two jobs in process, Job #22 (DM = $600 and DL = $780), and Job #23 (DM = $75

Force, The 70-m microwave transmission tower

The 70-m microwave transmission tower

Vital statistics, various types of measure of fertility

various types of measure of fertility

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