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Please solve this problem. Thanks! Please do not solve number 1, i have mistakenly added it. Please solve number 3. Thanks! 1. Maturity (years) 2
Please solve this problem. Thanks!
Please do not solve number 1, i have mistakenly added it. Please solve number 3. Thanks!
1. Maturity (years) 2 5 Zero-Coupon YTM 3.00% 3.50% 4.00% 4.50% 4.90% 1 3 4 a) What is the price today of a two-year default-free security with a face value of $1000 and an annual coupon rate of 3%? b) What is the price today of a five-year default-free security with a face value of $1000 and an annual coupon rate of 5%? 3. Suppose that a young couple has just had their first baby and start saving up for their child's college education. They decide to make deposits into an educational savings account on each of their daughter's birthdays, starting with her first birthday. Assume that the educational savings account will return a constant 8%. The parents deposit $3000 on their daughter's first birthday and plan to increase the size of their deposits by 4% each year. Assuming that the parents have already made the deposit for their daughter's 18th birthday, what is the amount available for the daughter's college expenses on her 18th birthday
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