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6 months 1 year 18 months 2 years 0.4% 0.5% 0.6% 0.7% The above spot rates relate to aMicrosoft Corp 2 year bond with semi
6 months | 1 year | 18 months | 2 years |
0.4% | 0.5% | 0.6% | 0.7% |
The above spot rates relate to aMicrosoft Corp 2 year bond with semi annual coupon payment with Coupon rate 1.625/2 = 0.8125. and the market price is 101.1
- There is another Microsoft Corp 2.5 year semi-annual 2% coupon paying bond in the market priced at $101.00. Using bond-specific spot rates above in Question 5 (for 0.5 year, 1 year, 1.5 year and 2 years), bootstrap 2.5-year spot rate for the bond. Show calculations. (3 marks)
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