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

Explain the financial accounting., Explain the Financial Accounting. Und...

Explain the Financial Accounting. Under the Financial Accounting System the producing of economic purchase are done in the Cash and Publication, in other Bookkeeping as Sales, P

Define mortality, Define Mortality: The following rates are used for measur...

Define Mortality: The following rates are used for measuring mortality. Crude death rate The annual crude death rate is defined as  Crude death rate = annual deaths / annual

What is a Business-type activity, What is a Business-type activity Reporte...

What is a Business-type activity Reported in the government-wide financial statements. Financed in whole or in part by fees charged to external parties for goods or services that

Biostatics, A national study found that treating people appropriately for h...

A national study found that treating people appropriately for high blood pressure reduced their overall mortality by 20%. Treating people adequately for hypertension has been diffi

Construct confidence interval for the true mean return, A researcher has ga...

A researcher has gathered data on the daily returns on a portfolio of call options over a recent 250-day period. The mean daily return has been 0.001 and the sample standard deviat

Difference, what is the difference between HISTORIGRAMS and HISTOGRAMS?

what is the difference between HISTORIGRAMS and HISTOGRAMS?

Correlation and regression, What is regression analysis ? Discuss the relat...

What is regression analysis ? Discuss the relation between ''correlation coefficient'' and the ''regression coefficients''?

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