Question
Suppose that all investors expect that interest rates for the 4 years will be as follows: Year Forward Interest Rate 0 (today)6 % 1 7
Suppose that all investors expect that interest rates for the 4 years will be as follows:
| Year | Forward Interest Rate | |
| 0 | (today)6 | % |
| 1 | 7 | % |
| 2 | 9 | % |
| 3 | 10 | % |
What is the price of a 2-year maturity bond with a 10% coupon rate paid annually? (Par value = $1,000)
Multiple Choice
-
$1,092
-
$1,054
-
$1,000
-
$1,073
-
None of the options are correct.
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Infrastructure Planning And Finance
Authors: Vicki Elmer, Adam Leigland
1st Edition
0415693187, 978-0415693189
