The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 4.99% 5.79%...

Question

Question

The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 4.99% 5.79% 5.99% 6.03% What is t

The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM - 5.54% 4.99% 5.54% 5.97% 6.06% W

Answer 1

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Answer #1

For question 1, 4 year YTM = 5.99%

FV = $100

n = 4

PMT = 0

So, PV = FV/(1+r)^n = 100/(1.0599)^4 = $79.24

For Question 2, risk free rate for 5 year maturity is same as YTM of 5 year maturity = 6.06%

Answer 2

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