Question
Given the following spot rates Years to Maturity Yield to Maturity 1 9% 2 10% 3 11% a.Calculate the price of a three-year annual coupon-paying
Given the following spot rates
| Years to Maturity | Yield to Maturity |
| 1 | 9% |
| 2 | 10% |
| 3 | 11% |
a.Calculate the price of a three-year annual coupon-paying bond using the spot rates. Assume the coupon rate is 5% and the face value is $100.
b.What is the yield to maturity of the bond?
c.Next, write a formula for determining the price of the bond using theyield to maturity. What is the relation between the YTM and the spot rates?
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Finance Introduction To Institutions Investments And Management
Authors: Ronald W. Melicher, Edgar A. Norton
12th Edition
0471675792, 9780471675792
