Question
Assume the zero-coupon yields on default-free securities are as summarized in the following table: Maturity 1 year 2 years 3 years 4 years 5 years
Assume the zero-coupon yields on default-free securities are as summarized in the following table:
| Maturity | 1 year | 2 years | 3 years | 4 years | 5 years |
| Zero-Coupon Yields | 4.00% | 4.30% | 4.50% | 4.70% | 4.80% |
What is the price of a three-year, default-free security with a face value of $1,000 and an annual coupon rate of 4%? What is the yield to maturity for this bond?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th Edition
0321374215, 9780321374219
