Assume that we have a bond maturing in a 4 years paying a coupon of 2% annually. Assume thatthe yield of this bond is 1.5%

1. Use the NAV formula to calculate the MV of this bond.
2. What is going to be the KRDs for this bond in years 1, 2, 3, 4?
3. Now assume that the year 3 isn't traded on the market. Estimate the 4 year KRD in this case.

Answer rating: 100% (QA)

To calculate the market value MV of the bond we can use the Net Asset Value NAV formula The NAV form... View the full answer