Question: There is a 5 year zero coupon bond on the market with the nominal value of 10000 PLN. The yield to maturity for this bond

There is a 5 year zero coupon bond on the market with the nominal value of 10000 PLN. The yield to maturity for this bond is 5%. Calculate the value of a quarterly coupon paid at the end of the quarter by the "console" (i.e. perpetual bond ) which currently cost the same as the above mentioned zero coupon bond. The rate of return (" the yield to maturity") from this console is 6.126%. What is the interest on the console if the nominal value of this console is 10000 PLN?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Indicate whether the statement is true or false, and justify your answer. Unlike with most types of goods, deriving a demand curve for health care is quite simple because people rarely skimp on...

There is a 5 year zero coupon bond on the market with the nominal value of 10000 PLN. The yield to maturity for this bond is 5%. Calculate the value of a quarterly coupon paid at the end of the...

you plan to go to graduate school in 4 years. you estimate the cost of your graduation program to be 10,000. you are thinking of investing a 5 year zero coupon bond and a 3 year 8% coupon bond with a...

If expected dividends grow at 8% and the appropriate discount rate is 19%, what is the value of a share with an expected dividend of $2.50? Multiple Choice $1316 O $83 33 $3125 $22.73 A 14 year zero...

Problem 1 (10 marks) Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8% paid annually, and a face value of $1,000. Each year you reinvested...

Hey man, i need help with 2 assignments, and they are due tomorrow at 5 pm. can you help me ? Assignment 3 Instructions Assignment 3 should be submitted after you have completed Unit 5. This...

13A (2 + 4 + 6 + 4 ] On 27 Nov 2018 10:50 AM, CCIL reported the following information on a friend whom you also met in your mid-term, 07.17 GS 2028. Market by Price 07.17 GS 2028 Click here for other...

Question 1 Diane Carter is interested in buying a 5 year zero coupon bond with a face value of $5,000. If the market interest rate on these types of bonds is currently 9 percent, what is the current...

1 Which of the following statements best describes a yield curve? A graph showing the yields of bonds versus their currency A graph showing the yields of bonds versus their credit rating A graph...

You own 4 bonds, each with a face value of $1000. These are namely, a 5 year zero coupon bond, a 4 year zero coupon bond, a 4 year bond with a 5% p.a. annual coupon and finally a 5 year bond with a...

After two years of the first five-year term at 6.7% compounded semiannually, Dan and Laurel decide to take advantage of the privilege of increasing the payments on their $110,000 mort- gage loan by...

The following are unrelated fact situations in which all individuals are at least 18 years of age. a) Gigi and Millie are siblings who each own 50% of the common shares of Bok Choy Enterprises Ltd....

A plant is initially 10 cm high. It grows 2 cm a week. After x weeks the height is y cm. a Write a function to show y in terms of x. b Copy and complete this table of values. There are three lines on...

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...