We have a bond of face value $100 and an annual coupon rate of 2.5%. The...
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We have a bond of face value $100 and an annual coupon rate of 2.5%. The coupon payment is made every half year and the face value is paid with the last coupon on the maturity date. That is, on each coupon payment date before the maturity date, the bond pays $1.25, and on the maturity date, the payment is $101.25. The current time is t, and the next coupon is known to happen on t+ 0.25 (i.e. 3 months from now). The maturity date of this bond is known to be T =t+2.25. The annual yield now = = is quoted at 1.88%. Use d 0.5 (i.e. the length of the reference time interval length is half a year). Compute the current bond price, B(t, T); round the answer to two decimal places. We have a bond of face value $100 and an annual coupon rate of 2.5%. The coupon payment is made every half year and the face value is paid with the last coupon on the maturity date. That is, on each coupon payment date before the maturity date, the bond pays $1.25, and on the maturity date, the payment is $101.25. The current time is t, and the next coupon is known to happen on t+ 0.25 (i.e. 3 months from now). The maturity date of this bond is known to be T =t+2.25. The annual yield now = = is quoted at 1.88%. Use d 0.5 (i.e. the length of the reference time interval length is half a year). Compute the current bond price, B(t, T); round the answer to two decimal places.
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To calculate the current bond price BtT we need to determine the present value of all future cash fl... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
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