Question: YOUR BANK is thinking to issue a regular coupon bond (debenture) with following particulars: Maturity = 4 years, Coupon rate = 9.000%, Face value =
YOUR BANK is thinking to issue a regular coupon bond (debenture) with following particulars: Maturity = 4 years, Coupon rate = 9.000%, Face value = $1,000.00, Coupon payments are annual at the end of year. In the fixed-income securities market, the yield curve for a bond with a similar default risk characteristics as one issued by YOUR BANK, is downwardsloping with the following interest rates per annum continuously compounded: R0,1=8.000%, R0,2=7.000%, R0,3=6.000%, R0,4=5.500%, and R0,5=5.00%, Where, notation R0,T is the spot-interest rate (at time t = 0) for T year maturity zerocoupon bond. As per you, what should be the issue (offer) price per bond of YOUR BANK?
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