Question
A 3-year par value bond with a face value of $1,000 pays annual coupons at a rate of 5% per year. The one-year, two-year, and
A 3-year par value bond with a face value of $1,000 pays annual coupons at a rate of 5% per year. The one-year, two-year, and three-year annual effective spot rates are 5%, 6%, and 7%, respectively. Find the price of the bond.
(A) 908
(B) 934
(C) 949
(D) 1000
(E) 1076
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
10th Edition
053875446X, 978-0538754460
