Question
Suppose that you have the following bonds: A: 1-year zero coupon bond has a YTM of 2.2% B: 2-year zero coupon bond has a YTM
- Suppose that you have the following bonds:
A: 1-year zero coupon bond has a YTM of 2.2%
B: 2-year zero coupon bond has a YTM of 3.0%
C: 3-year zero coupon bond has a YTM of 3.5%
- If each of these bonds has a face value of $1000, what are the prices of each of these bonds?
- What do bonds B and C imply about the interest rate in the third year?
- If the law of one price holds, what is the fair value of a 3-year coupon bond with a 10% coupon and a face value of $1000?
- What is the duration of the 3-year bond described in part c?
- What is the YTM of the 3-year bond described in part c?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
