You own a $1000 par zero-coupon bond that has 5 years of remaining maturity. You plan on
Question:
You own a $1000 par zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and believe that the required yield next year will have the following probability distribution:
A.What is your expected price when you sell the bond?
B.What is the standard deviation?
Transcribed Image Text:
Probability Required Yield % Probability 0.1 0.2 0.4 0.2 0.1 Required yield% 6.60% 0.1 0.2 0.4 0.2 0.1 6.75% 6.60% 6.75 7.00 7.20 7.45 7.20% 7.4590
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A What is your expected price when you sell the bond n 4 years after 1 year there would be 51 4 year...View the full answer
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Related Book For
Financial Markets And Institutions
ISBN: 978-0132136839
7th Edition
Authors: Frederic S. Mishkin, Stanley G. Eakins
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