Question
A 3-year bond carrying 3.5% annual coupon and $100-par is putable at par 1 year and 2 years from today. Calculate the value of the
A 3-year bond carrying 3.5% annual coupon and $100-par is putable at par 1 year and 2 years from today. Calculate the value of the putable bond under the forward rate curve below.
1-year spot rate: 2.1%;
1-year spot rate 1 year from now: 2.6%;
1-year spot rate 2 years from now: 4.3%.
Assume annual compounding. Round your answer to 2 decimal places (nearest cent).
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
