Question
A 1000 par-value bond with a 6% annual coupon rate matures in 3 years. You are given the one-year annual spot interest rate is 7%.
A 1000 par-value bond with a 6% annual coupon rate matures in 3 years. You are given the one-year annual spot interest rate is 7%. The two-year annual spot interest rate is 8%. The one-year forward rate for year 3 is 9%. Calculate the price of the bond.
no excel solution please
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Basic Finance An Introduction to Financial Institutions Investments and Management
Authors: Herbert B. Mayo
10th edition
1111820635, 978-1111820633
