1. Your savings account currently has $1,200. The account pays 5 percent interest compounded annually. How...

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Question

1. Your savings account currently has $1,200. The account pays 5 percent interest compounded annually. How...

1. Your savings account currently has $1,200. The account pays 5 percent interest compounded annually. How much will your account have 6 years from now?

2. A 10 year bond was issued three years ago. It pays 5% coupon semi-annually, and has a yield to maturity of 6%, what is the current market price of the bond?

3. A bond currently has a YTM of 8%. The bond matures in 3 years and pays interest semi-annually. The coupon rate is 7%. What is the current price of this bond

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Answer 1

Answer #1

Answer of Part 1:

FV = PV * (1 + r)^n
FV = $1,200 * (1+0.05)^6
FV = $1,200 * 1.3401
FV = $1,608.12

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Answer 2

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