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

Ascertainment bias, Ascertainment Bias A possible form of the bias, ma...

Ascertainment Bias A possible form of the bias, mainly in retrospective studies, which arises from a relationship amongst the exposure to the risk factor and the probability o

Nm, Ask question #Mmnhkinimum 100 words accepted#

Ask question #Mmnhkinimum 100 words accepted#

Probability, Find the z value corresponding if the area to the left of the ...

Find the z value corresponding if the area to the left of the z is 0.9452

Define salaries, Define Salaries Incomes are usually associated with "wh...

Define Salaries Incomes are usually associated with "white-collar" employees such as employees in offices, supervisors, experts, and experts. Paid employees are often paid semi-

Define vital statistics, Vital statistics may be interpreted in two ways-i...

Vital statistics may be interpreted in two ways-in a broader sense it refers to all types of population statistics by whatever mode collected while in a narrower sense it refers o

Regression, Regression line drawn as Y =C+1075x, when x was 2, and y was 23...

Regression line drawn as Y =C+1075x, when x was 2, and y was 239. Given that y intercept was 11. Calculate the residual.

Ploblem, free hand curve to measure secular trend

free hand curve to measure secular trend

Taxation law, An employer provides taxable fringe benefits of $11,000 (GST ...

An employer provides taxable fringe benefits of $11,000 (GST inclusive) for his employees during the relevant period, all being for creditable purposes and input tax credits of

Compute the test statistic, Choose a variable and collect data consisting o...

Choose a variable and collect data consisting of at least 30 values. Before collecting the data, decide what a likely average might be, then complete the following: a. Write a b

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