The YTM on a 6-month $20 par value zero-coupon bond is 18%, and the YTM on a 1-year $20 par value zero-coupon bond is 20%. These YTMs are semiannual BEYs. What would be the arbitrage-free price of a 1-year bond with coupon rate of 20% (semiannual payments) and par value of $1000?

Answer rating: 100% (QA)

To find the arbitragefree price of the 1year bond with a coupon rate of 20 semiannual p... View the full answer