2) Suppose the one year spot rate and two year spot rate are both 3%. a)...

Question

Question

2) Suppose the one year spot rate and two year spot rate are both 3%. a) What is the price of a two year ZCB? b) What is the

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Assuming par or face value of 100

1.
=100/1.03^2
=94.25959091

2.
=100/1.03
=97.08737864

3.
=100/1.03
=97.08737864

P.S.: I am not allowed to answer more than 1 question

Add a comment

Answer 2

Similar Homework Help Questions

Suppose the one year spot rate and two year spot rate are both 3%. a) What...

Suppose the one year spot rate and two year spot rate are both 3%. a) What is the price of a two year ZCB? b) What is the price of a one year ZCB today? c) What do I expect the price of a one year ZCB to be, one year from now? Same 3 questions except now the one year spot rate is 3% and the 2 year spot rate is 4%. Same 3 questions except now the one...
2) Suppose the one year spot rate and two year spot rate are both 3%. a)...

2) Suppose the one year spot rate and two year spot rate are both 3%. a) What is the price of a two year ZCB? b) What is the price of a one year ZCB today? c) What do I expect the price of a one year ZCB to be, one year from now?
2) Suppose the one year spot rate is 3% and two year spot rate is 4%....

2) Suppose the one year spot rate is 3% and two year spot rate is 4%. a) What is the price of a two year ZCB? b) What is the price of a one year ZCB today? c) What do I expect the price of a one year ZCB to be, one year from now?

Currently, the one year spot rate is 0.50% per year and the two year spot rate...

Currently, the one year spot rate is 0.50% per year and the two year spot rate is 1.00% per year. What is the expected one-year spot rate starting one year from today under the Pure Expectations Theory?
please show all work The 2-year spot interest rate is 6.34% and the 5-year spot interest...

please show all work The 2-year spot interest rate is 6.34% and the 5-year spot interest rate is 6.15%. What is the implied forward rate on a 3-year bond originating 2 years from now? O A 5.9% 8.6.14 OC. 6.8% one of the above Reset Selection Question 3 of 4 2.5 Points The bank forecasts the following one-year interest rates one and two years in the future: 4.85% and 5.20%. The current one-year interest rate is 4.56%. Estimate the annual...
9. (10 points) Suppose that the spot in spot interest rate on a two-year zero-com year...

9. (10 points) Suppose that the spot in spot interest rate on a two-year zero-com year Zero-coupon bond is 40 ar zero-coupon bond is 3.0%, the Assume annual compound a. (6 points) Based on the pure expectat is the expected one-year inte approximation from class.) se that the spot interest rate one-year zero-coupon Zero-coupon bond is 4.0 and the spot interest rate on a three al compounding throughout the problem. points) Based on the nume r ations theory of the...

2. You want to know what 2-year spot rates will be one year from now. According...

2. You want to know what 2-year spot rates will be one year from now. According to the pure expecta- tions theory, this unknown forward rate of interest is implied by current spot rates. The simplest method of calculating this forward rate is to use today's 1-year and 3-year spot rates; i.e., the spot rates that take you out to the start of, and to the end of the forward period of time you are interested in. Thus: (1 +...
(1.) Consider the following annualized spot yields: Maturity Annualized Spot Rate One Year 5.00% Two Years...

(1.) Consider the following annualized spot yields: Maturity Annualized Spot Rate One Year 5.00% Two Years 5.50% Three Years 6.00% Four Years 6.00% Five Years ? (a.) Assuming the expectations theory of the term structure is correct, calculate the expected one-year interest rate one year from now (i.e. 1f2). (b.) Assuming the expectations theory of the term structure is correct, calculate the expected one-year interest rate three years from now (i.e. 3f4). (c.) Suppose a forecasting service predicts that th...
Suppose the spot exchange rate be $1.45 per euro, the interest rate on one-year euro-denominated German...

Suppose the spot exchange rate be $1.45 per euro, the interest rate on one-year euro-denominated German government bond is 2%, and the expected future spot rate be $1.50 per euro. At the same time, the interest rate on dollar-denominated US government bond with the same maturity is 3%. a. Calculate the expected dollar return on the German government bond. b. Does your answer in Part (a) imply free capital mobility between the US and Germany? Explain your reasoning. c. Suppose...

The one-year, two-year, three-year, and four-year spot rates for the theoretical spot rate curve are 5.0%,...

The one-year, two-year, three-year, and four-year spot rates for the theoretical spot rate curve are 5.0%, 6.0%, 6.5%, and 7%, respectively. According the expectations theory for the term structure of interest rates, what is the expected 2-year interest rate 2 years from today? Assume annual compounding.

2) Suppose the one year spot rate and two year spot rate are both 3%. a)...

Homework Answers