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

Histogram and historigram, show the differences between histogram and histo...

show the differences between histogram and historigram

Statsgraphic , need to define one statistic and calculate value

need to define one statistic and calculate value

Bond premium cycle, Bond premium cycle The excess of the price for which a ...

Bond premium cycle The excess of the price for which a connection is acquired or sold over its face value resulting from a disparity connecting the market rate of interest and the

Histogram , The following figure shows a histogram of the annual maxima of ...

The following figure shows a histogram of the annual maxima of daily rainfall levels (in millimetres) recorded at Maiquetia international airport, Venezuela, for the years 1952 to

Linear Programming Models), #This is a chance to perhaps incorporate some o...

#This is a chance to perhaps incorporate some of your experience, interests, and career business/management goals and ambitions within the context of an individual project paper.

Demographic characteristics , Data   If you look at the Variable vie...

Data   If you look at the Variable view (at top of screen - select View and select variables), you will see the names of variables and information about each one.  The lab

Statistis, Mention the characteristics of Statistics. Explain any two appli...

Mention the characteristics of Statistics. Explain any two applications of Statistics.

Accrue definition in accounts, To history income and expenditures/expenses ...

To history income and expenditures/expenses when they connect with the identification requirements of the finance form engaged regardless of when the money action happens.

Covariance , how can write co variance using summation notation

how can write co variance using summation notation

Construct a stem-and-leaf diagram, An internal report issued by the marketi...

An internal report issued by the marketing manager of a oil-change franchise claims that the mean number of miles between oil changes is for franchise customers is at least 3600 mi

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