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What is the standard deviation of the bond price

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Reference no: EM131127255

You own a $1,000-par zero-coupon bond that has five years of remaining maturity. You plan on selling the bond in one year, and believe that the required yield next year will have the following probability distribution:

Probability Required Yield %

0.1 ......... 6.60%

0.2 ......... 6.75%

0.4 ......... 7.00%

0.2 ......... 7.20%

0.1 ......... 7.45%

a. What is your expected price when you sell the bond?

b. What is the standard deviation of the bond price?

Reference no: EM131127255

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