w12as2 - Assignment 2 1. Compute the present value of a...

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Assignment 2 1. Compute the present value of a two-period annuity of $1 per period if the discount rate is 10 percent. 2. A two-period annuity of $1 per period has a present value of $1.808. Find the discount rate from the present value table. 3. An annuity of $1 period runs from time 9 through time 13. The annuity has a present value of $2.3. Find the yield to maturity on this annuity. 4. A perpetual bond has a coupon of $8, par value of $100, and price of $80. Compute its yield to maturity, current yield, and stated yield. 5. Assume a bond paying a coupon of $4 semiannually and having a $100 par value and price. Determine the semiannual and annual yields to maturity. 6. Suppose Treasury STRIPS per $100 of par are $90 for a one-period and $85 for a two-period. A two-period bond with an $8 annual coupon and $100 par sells for $97. What arbitrage opportunities are available? What arbitrage opportunities would be available if the coupon-bearing bond sold for $101? 7.
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This note was uploaded on 02/28/2012 for the course FINE 442 taught by Professor Larbihammami during the Spring '12 term at McGill.

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w12as2 - Assignment 2 1. Compute the present value of a...

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