Fill in the missing information in the given table: (1 mark) Bond # 1 2 3 4...
- Fill in the missing information in the given table: (1 mark)
|
Bond # |
1 |
2 |
3 |
4 |
|
1-year strip bond |
2-year strip bond |
2-year 6% coupon bond |
2-year 7% coupon bond |
|
|
Purchase price ($xxxx.xx) |
–950.00 |
|||
|
Time 1 cash flow |
+1000.00 |
0 |
+60.00 |
+70.00 |
|
Time 2 cash flow |
0 |
+1000.00 |
+1060.00 |
+1070.00 |
|
Yield to maturity (xx.xx%) |
5.50% |
Homework Answers
| Bond# | 1 | 2 | 3 | 4 |
| Purchase price | -950 | -902(assuming same YTM as of 1 year strip bond) |
using ytm formula YTM=(int+(FV-PV)/t)/(fv+pv)/2 Purchase price=1009.23 |
1000 when no YTM is given we consider bonds are issued at par |
| Time 1 cash flow | 1000 | 0 | 60 | 70 |
| time 2 cash flow | 0 | 1000 | 1060 | 1070 |
| yield to maturity | 50/950*100=5.26% | 5.26% | 5.5% | 7% |
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Fill in the missing information in the given
table: (1
mark)
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