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

Quantitative techniques and decision making, Let the national income model ...

Let the national income model be: Y= c+1+G C=20+0.6y I=0.2y G=20 Where y= income, C= consumption, I= investment and G=government expenditure find y, C and I from the model. By quan

Responsiblity accounting significance, What is significance of Responsiblit...

What is significance of Responsiblity accounting in divisional performance statement measurement?

State income tax, State income tax In most declares paycheck accounting...

State income tax In most declares paycheck accounting will involve a condition earnings tax. In those declares a company is necessary to hold the condition earnings tax that an

quality, HOW I CAN WORK UPON EWMA CHART

HOW I CAN WORK UPON EWMA CHARTS?

Probability, Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3...

Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3. (a) If A and B are independent then compute the probability that Both A and B happen

Cost accounting, Problems and solutions in marginal costing

Problems and solutions in marginal costing

Cost accounting, 1. ABC produces a single product. Material A is added at t...

1. ABC produces a single product. Material A is added at the start of production and Material B at the end. Conversion is uniform throughout. Inspection before Material B is added.

T accounts, if my income for the rest of the month was 2,500 and i recieved...

if my income for the rest of the month was 2,500 and i recieved 1,200 in cash balance on account where would i put this

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