Find out the present value, Basic Statistics

The present value (price) formula for a coupon bond is:

PV = C/(1+i) + C/(1+i)2 + ... + C/(1+i)n + F/(1+i)n

Part a

The present value (price) formula for a zero coupon bond is:

 PV = F/(1+i)n

Plugging in the given information,

 Price = $1000/(1+0.1)15 = $239.39

Thus the price of the fifteen-yr zero coupon bond is $239.39.

Part b

Semiannual coupon = 6%*$500/2 = $15

Plugging in the given information,

Price = $15/(1+(0.1/2)) + $15/(1+(0.1/2))2 +..... + $15/(1+(0.1/2)6 + $500/(1+(0.1/2)6 = $449.24

Thus the price of the three-yr semiannual 6% coupon bond is $449.24.

Posted Date: 3/5/2013 8:00:15 AM | Location : United States







Related Discussions:- Find out the present value, Assignment Help, Ask Question on Find out the present value, Get Answer, Expert's Help, Find out the present value Discussions

Write discussion on Find out the present value
Your posts are moderated
Related Questions

Variation Coefficient The standard deviation discussed above is an absolute measure of dispersion. The corresponding relative measure is known as the coefficient of variation. Thi

You are working for the management of ESK Jewellery as a marketing consultant. The main business of ESK Jewellery is the retailing of diamond jewellery. They opened their first sho

1. Unrestricted cash contributions received during the year, $300,000. 2. Restricted cash contributions were received during the year for the following: Education


Playbill magazine reported that the mean annual household income of its readers is $119,155 (Playbill, January 2006). Assume this estimate of the mean annual household income is ba

Question: Data entry clerks at ARCO key in thousands of insurance records each day.  They have just completed a new training program and want to establish a control chart based


A prevent of huge m = 10 kg is drawn by a power F = 100 N at a position q = 30o with the horizontally along a sleek horizontally exterior. What is the speed of the block? (g = 10 m

what is probabality