Question: Problem#5: YOUR BANK is thinking to issue a regular coupon bond (debenture) with following particulars: Maturity = 5 years, Coupon rate = 8%, Face value

Problem#5: YOUR BANK is thinking to issue a regular coupon bond (debenture) with following particulars: Maturity = 5 years, Coupon rate = 8%, Face value = $1,500, Coupon payments are annual at the end of year. In the fixed-income securities market, the yield curve for the bond similar to the one issued by YOUR BANK is upward sloping with following interest rates per annum continuously compounded: R0.1 = 5.50%, R0.2 = 6.00%, R0.3 = 7.00%, R2,4 = 7.250%, and R0.5 = 8.00%, Where, notation Rot is the spot-interest rate (at time t=0) for T year maturity zero-coupon bond. As per you, what should be the issue offer) price per bond of YOUR BANK? (a) $1,511.74 (b) $1,157.83 (c) $1,171.45 (d) $1,492.99 (e) $1,492.99 (f) $1,511.74 (g) $1,500.00 (h) $1,660.13
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