S07Assg4soln

S07Assg4soln - FIN 2200 CORPORATION FINANCE Sum 2007...

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FIN 2200 – CORPORATION FINANCE Sum 2007 Instructors: A. Dua Assignment #4 key ii) If you believe in the pure expectations theory, then what do you expect its price to be four years from today? 56 . 934 \$ 0700212064 . 1 000 , 1 ] price [ E % 00212064 . 7 ) 0625 . 1 ) 064 . 1 ( ) r 1 ( ) r 1 ( f f rate at year 1 discounted \$1,000 equal should price 4 5 4 4 5 5 5 5 = = = = + + = = f) Suppose a bond has a 6% annual coupon, a face value of \$1,000 and matures in 2
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S07Assg4soln - FIN 2200 CORPORATION FINANCE Sum 2007...

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