Chapter08_xlsSol - Problems Problem 8-3 Problem 8-4 Problem...

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Problems Problem 8-3 Problem 8-4 Problem 8-12 Problem 8-13 Problem 8-22 Problem 8-26
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Problem 8-3 Maturity (years) 1 2 3 4 Price (per $100 face value) $95.51 $91.05 $86.38 $81.65 a. Compute the yield to maturity for each bond. Par value 100 Maturity (years) 1 2 3 4 Price (per $100 face value) 95.51 91.05 86.38 81.65 Yield to maturity 4.70% 4.80% 5.00% 5.20% b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat? The Yield Curve is Upward Sloping The following table summarizes prices of various default-free zero-coupo (expressed as a percentage of face value): 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 4.20% 4.40% 4.60% 4.80% 5.00% 5.20% 5.40% 5.60% Zero coupon bond yield curve Yield to matu Years to maturity Yield to maturity
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5 $76.51 5 76.51 5.50% on bonds turity
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Problem 8-4 Suppose the current zero-coupon yield curve for risk-free bonds is as follows Maturity (years) 1 2 3 4 5 YTM 5.00% 5.50% 5.75% 5.95% 6.05% a. What is the price per $100 face value of a two-year, zero-coupon, risk-fre b. What is the price per $100 face value of a four-year, zero-coupon, risk-fre c. What is the risk-free interest rate for a five-year maturity? Par value 100 Maturity (years) 1 2 3 4 5 Yield to maturity 5.00% 5.50% 5.75% 5.95% 6.05% Price of the bond 95.24 89.85 84.56 79.36 74.55 a. 89.85 b. 79.36 c. 6.05%
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ee bond? ee bond?
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Chapter08_xlsSol - Problems Problem 8-3 Problem 8-4 Problem...

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