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

Icmap, 03 (a) Explain the term capital rationing and suggest the criteria t...

03 (a) Explain the term capital rationing and suggest the criteria to be used in ranking projects under capital rationing. (05) (b) There are three projects X Y and Z having follow

Driver''s test, what are commonly missed driver''s test questions?

what are commonly missed driver''s test questions?

How to stretch or shrink a graph, Q. How to stretch or shrink a graph? ...

Q. How to stretch or shrink a graph? Ans. If you have the equation of a graph, you can stretch or shrink the graph, in either the x or the y direction, just by multiplying

Conversion bonds, i need problems and their answers in a simplified way to ...

i need problems and their answers in a simplified way to understand the material because im really having troubles understanding how to solve conversion bonds and share warrants pr

perform hypothesis test and find the minimum sample size, Questions ...

Questions In one hybridization experiment 8070 offspring seeds were obtained, and 23.54% of them had green flowers.  The others had white flowers.  Perform a hypothesis test

Tax, _______ 1. F''s share of income from various sources is as follows for...

_______ 1. F''s share of income from various sources is as follows for the current year: Source F''s Share of Entity''s Net Income F''s Share of Distributions ABC Partnership after

Question, #quea national poll of 1836 respondents indicated that 36% suppor...

#quea national poll of 1836 respondents indicated that 36% support the NDP. Test whether this is sufficient evidence to show that the NDP support has increased since the election.

Compute the value of beta - simple linear regression , Simple Linear Regres...

Simple Linear Regression One measure of the risk or volatility of an individual stock is the standard deviation of the total return (capital appreciation plus dividends) over

Help, How many different license plate of 5 digits can be made if the most ...

How many different license plate of 5 digits can be made if the most let digit is 4 and the second digit from left is an odd number

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