Question: The correct solutions are highlighted. Please explain the calculation in details. Thank you! 9 Microsoft's CFO, Peter Klein, is asking your advice with respect to

The correct solutions are highlighted. Please explain the calculation in details. Thank you!

9 Microsoft's CFO, Peter Klein, is asking your advice with respect to the purchase of one-year dollar-denominated zero coupon bonds to be issued by the Republic of Iceland on March 31 How much would you suggest Microsoft to bid for a bond with a redemption (par) value of S100? Standard & Poor's and Fitch recently assigned the Republic of Iceland a sovereign credit rating of BBB-. The yield to maturity for bonds rated BBB- and denominated in Icelandic kronas (ISK) is 2% (per year). The yield to maturity for bonds rated BBB-and denominated in U.S. dollars ($) is 2.82% (per year) a. ISK98.04 b. ISK97.26 c. $97.26 d. $98.0-4 10 How much would you suggest Microsoft to bid for a one-year euro-denominated zero coupon bond to be issued by the Republic of Iceland with a redemption (par) value of 100? The spot rate is $1.23/ and the one year forward rate is $1.25/. a. 97.26 b. 98.84 c. $97.26 d. $98.8-4 9 Microsoft's CFO, Peter Klein, is asking your advice with respect to the purchase of one-year dollar-denominated zero coupon bonds to be issued by the Republic of Iceland on March 31 How much would you suggest Microsoft to bid for a bond with a redemption (par) value of S100? Standard & Poor's and Fitch recently assigned the Republic of Iceland a sovereign credit rating of BBB-. The yield to maturity for bonds rated BBB- and denominated in Icelandic kronas (ISK) is 2% (per year). The yield to maturity for bonds rated BBB-and denominated in U.S. dollars ($) is 2.82% (per year) a. ISK98.04 b. ISK97.26 c. $97.26 d. $98.0-4 10 How much would you suggest Microsoft to bid for a one-year euro-denominated zero coupon bond to be issued by the Republic of Iceland with a redemption (par) value of 100? The spot rate is $1.23/ and the one year forward rate is $1.25/. a. 97.26 b. 98.84 c. $97.26 d. $98.8-4

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