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Questions and Problems
A.1
The oneyear spot rate is 10 percent and the twoyear spot rate is 11 percent.
a.
What is the price of a twoyear bond that pays an annual coupon of 6
percent?
b.
What is the yield to maturity of this bond?
A. 2
The oneyear spot rate is 10 percent and the twoyear spot rate is 8 percent.
What
is the price of a twoyear bond that pays an annual coupon of 5 percent?
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Unformatted text preview: A.3 If the oneyear spot rate is 9 percent and the twoyear spot rate is 10 percent, what is the oneyear forward rate over the second year? A.4 Assume the following spot rates: Year Spot Rate (%) 1 5 2 7 3 10 a. Calculate the oneyear forward rate over the second year. b. Calculate the oneyear forward rate over the third year....
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This note was uploaded on 04/04/2009 for the course FIN FIN/554 taught by Professor Timothydreyer during the Summer '06 term at University of Phoenix.
 Summer '06
 TimothyDreyer
 Finance

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