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

Absorption costing and marginal costing, 2. From the following cost, produc...

2. From the following cost, production and sales data of Decors Motor Ltd., prepare comparative income statement for three years under (i) absorption costing method, and (ii) margi

Difference between estimated proportions of business owners, Question 1. In...

Question 1. In 2009, Research New Zealand conducted a survey on small businesses in New Zealand. Small businesses were defined as enterprises with 19 or fewer employees. 501 small

Probabilities, What is the probability of selecting exactly one red and one...

What is the probability of selecting exactly one red and one blue fish (Total red is .479 and total blue is .521 and total of both is 1.000) I cannot figure out the formula or how

General insurance accounts preparation and Regulation of inv, X Ltd had 100...

X Ltd had 100000 9% redeemable preference shares of Rs.100 each full paid. The company decided to redeem these pref. shares at par by issue of sufficient number of equity shares of

Amplification, Amplification is the process by which the magnitudes of the ...

Amplification is the process by which the magnitudes of the variable quantity is increasing, especially the magnitude of voltage, current or power, without changing any other quant

Estimate the expected monetary value, 3DP, a Luxembourg-based company plans...

3DP, a Luxembourg-based company plans to develop and sell highly specialized 3D printers. The cost of product development is estimated at EUR 50,000.-, irrespective of whether or n

Violence in the Media, I need help on writing a paper about this title

I need help on writing a paper about this title

Velocity, A car moves with constant velocity along a straight road. Its pos...

A car moves with constant velocity along a straight road. Its position is x1 = 0m at t1 = 0 seconds and is x2 = 56 m at t2 = 5.0 s. what is the cars position at t=2.5 seconds and

Accounting standards in canada, Accounting Standards in  Canada:  : In...

Accounting Standards in  Canada:  : In 2005, the Accounting Standards Board in Canada promoted the use of IFRS over the use of GAAP. The companies of Canada are supposed to ad

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