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

Operation research, Meaning and solving example using north-west corner in ...

Meaning and solving example using north-west corner in Transportation problem

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

Inventory, An audit of the accounting records of Loch Ness Ltd. for the yea...

An audit of the accounting records of Loch Ness Ltd. for the year ending 30 June 2012 discovered that the ending inventory balance was over-valued by $35,000. Upon further investig

Nominal data, what type of analysis is suitable for nominal data?

what type of analysis is suitable for nominal data?

Survival analysis and regression for rates, This assignment counts for 40% ...

This assignment counts for 40% of the total grade for the subject.  There are 100 marks for the assignment.  Including figures and tables, it should be no more than 10 pages. Yo

Explain what is signal reliability ration, A. If CD players are able to use...

A. If CD players are able to use the LDD strategy better than pure chance then explain what happens to the signal reliability ration as a CD player detects more cautiously B. As

Marginal and absorption costing, the guinegog is a trader in portable cd-ma...

the guinegog is a trader in portable cd-man. His budgeted output is 5000 units per quarter. The following data was available for the year 1998: Direct labour @ $6 Direct material @

Histogram and historigram, show the differences between histogram and histo...

show the differences between histogram and historigram

Check register, Check register The text or document used to evidence perti...

Check register The text or document used to evidence pertinent details relating to expenditure/expense vouchers & coding for each ensure issued,

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