Suppose the six month spot rate is 10.9% and the six month forward rate beginning in six

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Suppose the six month spot rate is 10.9% and the six month forward rate beginning in six months is 10.1%.

What is the price of a 1 year bond paying a coupon of 5.7%?

Assume coupons are paid semi-annually and the face value of the bond is $1,000. Assume rates are expressed BEY.

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Fundamentals of Corporate Finance

ISBN: 978-1259024962

6th Canadian edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim

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Posted Date: May 25, 2023 02:24 AM

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Suppose the six month spot rate is 10.9% and the six month forward rate beginning in six

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SOLUTION To calculate the price of a 1year bond paying a coupon of 57 we need to discount the future ... View the full answer

Fundamentals of Corporate Finance

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