Question

4. You are given the following two bonds: (a) A one year zero coupon bond that matures for 10,000 with a price of 9600. (b) A two year bond with annual coupons of 2000 and a maturity value of 10,000. The price of the bond is 12,745. Using these bonds, determine the forward rate for time 1 to 2 which is f...

Answer 1

calculations of parband satele time 1_102 @ one year zero coupon Pite iş 9,600. band that matures for 10,000 and year 9600 600 10,000 - Futuse value a prestand value [lu periodic ioksest setaju - 10.000 € 94600_[1ton (lta' a 10.000 9,600 D a 10,000 ) 0.04.166. (C) 4.17:/._ 9600 a & 2 md year, ② Price - K 12,75 4.17% van - year coupon 2,000 2.000 + 10,000 price of band coupes amottmotorite value couple amont (1+prix) to be tentacle] [l#fis]

19,745 = + 2,000 (1+4.17 7.) 2000+10,000 [+Fir] [144.171.] 12,745_ n 1919.94+ 12.000 [1+fir] [1+4,17% =) =) 10,825206_ 12000 (l+fiv) (1+4.177.] [14.6ix] [144.17%. La 1.1065388 Ifra 1.06416328 fira .06416328--| ---fir = 0.64.16398_101_6.42%. . poruscand interest.sate for time I.to.) 16424)