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

Statistical analysis of hedge funds returns, In this problem set we are goi...

In this problem set we are going to analyze returns of indices for three hedge funds strategies (market neutral, risky arbitrage, long/short). The indices are constructed by CSFB/T

How to stretch or shrink a graph, Q. How to stretch or shrink a graph? ...

Q. How to stretch or shrink a graph? Ans. If you have the equation of a graph, you can stretch or shrink the graph, in either the x or the y direction, just by multiplying

Index nos, why indux number considerd as an economic barrometer

why indux number considerd as an economic barrometer

Determine the mean and standard deviation, 1.)  Two dice are rolled and the...

1.)  Two dice are rolled and the sum is calculated.  Let X represent the sum of the two dice. Construct a probability distribution expressing probabilities in fractional form. 2

Frequency distribution, hey goo day, i wanna know the definition of frequen...

hey goo day, i wanna know the definition of frequency distribution and how to conduct it like in examples?

Price level change, how effect changes in prices to a financial statement?

how effect changes in prices to a financial statement?

Quartiles and percentiles, Quartiles and Percentiles Percentile can ...

Quartiles and Percentiles Percentile can be explained as : a measure this tells us what is the percent of the total frequency scored at or below the measure. Quartiles

Mean and standard deviation, We have two applicants who are applying for a ...

We have two applicants who are applying for a job. They both took the high school exit exam, but different ones. Shannon took the ACT and scored 26, Frank took the SAT scored 1350.

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