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All neccesary information is included in the image, please answer with excel equations. Suppose that a I-year zero-coupon bond with face value $100 currently sells
All neccesary information is included in the image, please answer with excel equations.
Suppose that a I-year zero-coupon bond with face value $100 currently sells at $94.34, while a 2-year zero sells at $84.99. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 12% per year. 4 What is the yield to maturity of the 2-year zero? Yield to Matu 2- ear zero 9 What is the yield to maturity of the 2-year coupon bond? Yield to Matu 2- ear cou on bond 12 What is the forward rate for the second year? 14 Forward rate 16 If the expectations hypothesis is accepted, what are (1) the expected price of the coupon bond at the end of the first year and (2) the expected holding-period return on the coupon bond over the first year? 18 20 Ex ected ice after the first cou n is aid ou 21 Ex ected holdin eriod return includin cou n Answer the above two questions under the liquidity preference hypothesis, assumming 1% per year liquidity premium. 23 25 Ex ected ice after the first cou n is aid out 26 Ex ed holdin iod return includin cou n
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