Question
The current yield curve for default-free zero-coupon bonds is as follows: Maturity (years) Yield to maturity 1 4% 2 5% 5 5.5% Use this information
The current yield curve for default-free zero-coupon bonds is as follows:
| Maturity (years) | Yield to maturity |
| 1 | 4% |
| 2 | 5% |
| 5 | 5.5% |
Use this information to answer the following questions:
What is the price today of a zero-coupon bond with a maturity of 2 years and a face value of $1,000?
What is the in 1 year for 1 year forward rate
You are interested in buying a default-free security with the following cash flows after 2 years and after 5 years (cash flows are zero at all other dates):
| Year | Cash flow |
| 2 | $100 |
| 5 | $1,000 |
What is the fair price of this security today?
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Handbook Of Blockchain Digital Finance And Inclusion
Authors: David Lee, Robert H. Deng
1st Edition
0128104414, 978-0128104415
