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

Normal distribution, Lifts usually have signs indicating their maximum capa...

Lifts usually have signs indicating their maximum capacity. Consider a sign in a lift that reads “maximum capacity 1400kg or 20 persons”. Suppose that the weights of lift-users are

Website needed, Where can I find statistics on how goal setting can help el...

Where can I find statistics on how goal setting can help elementary students?

Homogeneity, Let f (?) be the production function associated with a single-...

Let f (?) be the production function associated with a single-output technology, and let Y be the production set. Show that Y satisfies constant returns to scale if and only if f (

Variation Coefficient, Variation Coefficient The standard deviation discus...

Variation Coefficient The standard deviation discussed above is an absolute measure of dispersion. The corresponding relative measure is known as the coefficient of variation. Thi

Probability, A coin was flipped twenty times and landed on heads fifteen ti...

A coin was flipped twenty times and landed on heads fifteen times. If the coin was balanced fair what is the probability of a head on the next toss

Cost control, how to make assignment maintenance cost control

how to make assignment maintenance cost control

Binomial expansion, what is the largest coefficient of (1+3x)^4 is ?

what is the largest coefficient of (1+3x)^4 is ?

Predictive Sales Report, A retail store has recently hired you as a consult...

A retail store has recently hired you as a consultant to advise on economic conditions. One important indicator that the retail store is concerned about is the unemployment rate.

Sample size, difference between large sample and small sample

difference between large sample and small sample

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