Question: Answer the Questions please with your own words and calculation if needed so i can up vote 1. You own a $1,000-par zero-coupon bond that
Answer the Questions please with your own words and calculation if needed so i can up vote
1. You own a $1,000-par zero-coupon bond that has 6 years of remaining maturity. You plan on selling the bond in one year and believe that the yield next year will have the following probability distribution:
| Probability | Yield |
| 0.1 | 1.70% |
| 0.2 | 1.75% |
| 0.4 | 2.20% |
| 0.2 | 2.25% |
| 0.1 | 2.50% |
a. What is your expected price when you sell the bond?
b. What is the risk associated with the bond (standard deviation)?
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