QUESTION 14

1.Problem E,

You are facing the following four Bonds which pay annual coupons:

BondsABCD

Face($)1000100010001000

Present Price ($)1009.34581008.9778993.5862967.6028

Annual Coupon($)80808080

Maturity1year2years3years4years

Annual Yield Rate (%)7.007.50???9.00

The annual Yield Rate (%) for bond C is:

8.25

7.75

9.00

8.75

2 points

QUESTION 15

1.The Forward Rate of bond B for the second year is (%)

8.00234

7.50000

7.70234

8.30234

2 points

QUESTION 16

1.The discounted value of the face value of bond B at the end of the first year (beginning of the second year) should be

927.2326

923.9059

925.9059

930.2326