Question
7)Use the following table of forward rates to answer Questions 7-8. Time Period Forward Rate 0y1y 0.80% 1y1y 1.12% 2y1y 3.94% 3y1y 3.28% 4y1y 3.14%
7)Use the following table of forward rates to answer Questions 7-8.
| Time Period | Forward Rate |
| 0y1y | 0.80% |
| 1y1y | 1.12% |
| 2y1y | 3.94% |
| 3y1y | 3.28% |
| 4y1y | 3.14% |
What is the 4-year implied spot rate? Express your answer in percentage terms (3.5, not 0.035) and round your answer to 3 decimal places.
8)
Use the following table of forward rates to answer Questions 7-8.
| Time Period | Forward Rate |
| 0y1y | 0.80% |
| 1y1y | 1.12% |
| 2y1y | 3.94% |
| 3y1y | 3.28% |
| 4y1y | 3.14% |
Given your answer to Question 7 above, what is the value per 100 of par value of a four-year, 3.5% coupon bond, with interest payments paid annually? Round your answer to 3 decimal places.
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Financial Statement Analysis
Authors: Martin S. Fridson, Fernando Alvarez
5th Edition
1119457149, 978-1119457145
