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

Probability, a survey of grocery revealed 40 percent had a pharmacy, 50 per...

a survey of grocery revealed 40 percent had a pharmacy, 50 percent had a floral shop, and70 percent had a deli. suppose 10 percent of the stores have all three departments, 30 perc

#title.regression., regression line drawn as y=c+1075x,when x was 2,and y w...

regression line drawn as y=c+1075x,when x was 2,and y was 239,given that y intercept was 11.calculate the residual

Definition of management accounting, Definition of Management Accounting ...

Definition of Management Accounting According to the Chartered Institution of Control Agency (CIMA), Control Sales is "the procedure of recognition, statistic, build up, researc

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

S, What is samplings and its methods

What is samplings and its methods

National demand, The national demand and price for a certain type of energy...

The national demand and price for a certain type of energy-efficient exhaust fan are related by p=441-3/7q, where p is the price and q the demand. The price and supply of the exhau

Comprehending Behavior Statistics, I was recently buying shoes when the sal...

I was recently buying shoes when the salesperson commented on how large my feet were. After telling him he had lousy sales techniques, I decided to investigate if I really do have

Financial limitations and expertise, Expertsmind.com offering Limitations ...

Expertsmind.com offering Limitations and expertise in financial accounting In Financial sales it is also useful in the following respects:- (1) Increased volume of finan

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