Find out the present value, Basic Statistics

Assignment Help:

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.


Related Discussions:- Find out the present value

Statistics is the backbone of decision-making, 1. (a) 'Statistics is the ba...

1. (a) 'Statistics is the backbone of decision-making'. Describe.     (b) 'Statistics is as good as the user'. Describe. 2.  Differentiate between the following with example.

Cost accounting, Significant discussion has occurred in the literature on m...

Significant discussion has occurred in the literature on making management accounting more relevant to the current business environment, which is dominated by discussions of global

Replacement theory, who is the mathematician who invented replacement theor...

who is the mathematician who invented replacement theory of operation research

Paasche` quantity index calculationca, Base year price 10,12,18,20 and quan...

Base year price 10,12,18,20 and quantity 49,25,10,5 respectively. current yr quantity 50,20,12& 2

Individual tax accounting, need help with exercise that asks to calculate g...

need help with exercise that asks to calculate gross income, adjusted gross income and taxable income based on items1-13, which i can submit the exercise copies as soon as you tell

Biostatics, A national study found that treating people appropriately for h...

A national study found that treating people appropriately for high blood pressure reduced their overall mortality by 20%. Treating people adequately for hypertension has been diffi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd