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

Cost control, how to make assignment maintenance cost control

how to make assignment maintenance cost control

Treatment of cst and vat, Treatment of CST and VAT in Sales Book A suppl...

Treatment of CST and VAT in Sales Book A supplier who expenses the CST for inter declares purchase by him, is responsible to first deposit the gathered CST from bought to Got Co

Calculate operational variances -planning variances, You have recently join...

You have recently joined XYZ, an international company that produces a wide range of office supplies and stationary goods. In your new role as Group Management Accountant your firs

Amortized cost , Amortized cost The par value of its decision enhanced or ...

Amortized cost The par value of its decision enhanced or lowered by any unamortized top quality or lower price.

Calculate the predicted mean temperature, The following are actual data sho...

The following are actual data showing the latitude of a sample of major cities in the northern hemisphere and their mean high annual temperature. latitude(X)    mean high temp(Y

Cash equivalent., Cash equivalent Short-term: highly liquid investments th...

Cash equivalent Short-term: highly liquid investments that are together [1) readily convertible to known amounts of cash & [2) so close to their maturity that they there insignifi

Define block grant, Define block grant A federal grant that consolidates, ...

Define block grant A federal grant that consolidates, for a wide reason or any type of purpose, funds previously awarded for a wide variety of activities.

IFRS, I am currently doing a report on IRFS and have to identify the the is...

I am currently doing a report on IRFS and have to identify the the issues involved with businesses adopting IRFS

Mean, It is a numerical average, as equal to the sum of terms in a given se...

It is a numerical average, as equal to the sum of terms in a given series divided by the number of terms in that series is the mean which is also called the expected value.

Total quality management, Statistical process control, a methodology used f...

Statistical process control, a methodology used for controlling and improving the outcomes of operational processes, has been in use for almost 100 years!  It was widely used in ma

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