FINANCE
FINANCE 1
Bond Pricing using Continuous compounding exercises Upload your Excel calculations addressing the following exercises: 1)Give the Continuous...
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Upload your Excel calculations addressing the following exercises:

1)     Give the

Continuous compounding equivalent rates of: 

a.      Rate: 2%pa semi-annual

b.     Rate: 3% pa monthly compounded


2)     Use those two CC to price the following bonds  :

a.      Par 100; zero coupon; 2 years maturity

b.     Par 100; zero coupon; 4 years maturity

c.      Par 100; coupon 2.5% pa; 2 years maturity

d.     Par 100; coupon 2.5 pa; 4 years maturity

e.     Par 100; coupon 2.5% pa semiannual payments; 2 years maturity

f.       Par 100; coupon 2.5% pa semiannual payments; 4 years maturity


3)     

Use the following continuous compounded spot rates to price a bond paying 8% coupon pa with semiannual payments, par 100, 4 years until maturity.

Maturity Zero Rate(% cont comp)

6 months  3

1 year 3.2

1.5 years 3.4

2 years 3.55

2.5 years 3.65

3 years 3.75

3.5 years 3.8

4 years 3.85


4)     What is the implied continuous compounded YTM for such bond?

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