he spot rates are Time to maturity Spot rate 1 year 3.00% 2 years 4.00% 3...
he spot rates are
| Time to maturity | Spot rate |
| 1 year | 3.00% |
| 2 years | 4.00% |
| 3 years | 4.70% |
| 4 years | 5.20% |
What is the yield to maturity of a 4-year bond with a six percent annual coupon? Answer to the nearest 0.01%, leaving off the % sign.
Homework Answers
Face Value=100
Coupons=Coupon rate*Face (or Par) value=6%*100=6
Price of the
bond=6/1.03+6/1.04^2+6/1.047^3+6/1.052^4+100/1.052^4=103.1454707
Using financial calculator
N=4
PMT=6%*100=6
FV=100
PV=-103.1454707
CPT I/Y=5.111%
Hence, yield to maturity=5.111%
Add Answer to:
he spot rates are
Time to maturity
Spot rate
1 year
3.00%
2 years
4.00%
3...
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yield to maturity ofAS1000bond with aG96 obupon rate, semiannualaupoits andfwoven to maturity is 7.6% APR, compo price be? unded semia 48 06 the spot rates for six months, ears are 1%, 1....
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Debt & Bonds 1. The table below presents the spot rates an investor faces. Year Spot...
Debt & Bonds
1. The table below presents the spot rates an investor
faces.
Year
Spot Rate
1
2%
2
3%
3
4%
4
5%
Assume that, for each maturity, there is a zero-coupon bond
traded in the market. These zeros pay $1,000 at their respective
maturity.
a. Is the term structure positive, inverted, or flat?
b. What is the forward rate from t=1 to t=2?
c. Suppose that the investor is expecting to receive $1 million
at t=1. This...
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Debt & Bonds
1. The table below presents the spot rates an investor
faces.
Year
Spot Rate
1
2%
2
3%
3
4%
4
5%
Assume that, for each maturity, there is a zero-coupon bond
traded in the market. These zeros pay $1,000 at their respective
maturity.
a. Is the term structure positive, inverted, or flat?
b. What is the forward rate from t=1 to t=2?
c. Suppose that the investor is expecting to receive $1 million
at t=1. This...
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