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Finance Problem

 
 
Reply Wed 28 May, 2014 06:24 pm
The 1-year to 5-year spot rates are 3%, 3.5%, 4%, 4.5%, and 5%, respectively. Consider a 5-year, 6% annual coupon paying bond? The face value of the bond is $1,000. Which of the following statements are true?
i. The price of the bond is $1,048.45
ii. The yield to maturity is 4.88%
a. i only
b. ii only
c. Both i and ii
d. None of the above
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Type: Question • Score: 2 • Views: 1,082 • Replies: 2
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cicerone imposter
 
  -1  
Reply Wed 28 May, 2014 07:36 pm
@amukeba2014,
d. Rates are based on value of the asset at the time of the quote.
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fobvius
 
  1  
Reply Fri 30 May, 2014 11:36 pm
@amukeba2014,
The price of a 5 year bond with a coupon of 6% payable annually at a yield of 4.88% p.a. is $1,048.65.


http://www.quantwolf.com/calculators/bondpricecalc.html
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