use the DCF method to calculate the price of a 2-year bond with a face value...
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use the DCF method to calculate the price of a 2-year bond with a face value is $1000, given time- varying spot rates and interest rates for coupons in the following table year spot rate coupon interest rate 1 3% 1% 2 4% 2% use the DCF method to calculate the price of a 2-year bond with a face value is $1000, given time- varying spot rates and interest rates for coupons in the following table year spot rate coupon interest rate 1 3% 1% 2 4% 2%
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To calculate the price of a 2year bond using the DCF method we need to discount the future cash flows of the bond to their present value using the appropriate discount rate The future cash flows of a bond include the coupon payments and the face value payment at maturity The coupon payments for the bond are 20 per year 2 coupon interest rate x 1000 face value paid annually The face value payment at maturity is 1000 To determine the appropriate discount rate for each cash flow ... View the full answer
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