24. Spot interest rates and yields (S3.3) You have estimated spot rates as follows: r1 = 5.00%,...
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24. Spot interest rates and yields (S3.3) You have estimated spot rates as follows:
r1 = 5.00%, r2 = 5.40%, r3 = 5.70%, r4 = 5.90%, r5 = 6.00%.
a. What are the discount factors for each date (i.e., the present value of $1 paid in year t)?
b. Calculate the PV of the following bonds assuming annual coupons and face values of
$1,000: (i) 5%, two-year bond; (ii) 5%, five-year bond; and (iii) 10%, five-year bond.
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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