Question
The table below displays yields to maturity (YTM) of zero-coupon, risk-free securities: Maturity 1 year 2 years 3 years 4 years 5 years YTM 4.6%
The table below displays yields to maturity (YTM) of zero-coupon, risk-free securities:
| Maturity | 1 year | 2 years | 3 years | 4 years | 5 years |
| YTM | 4.6% | 4.3% | 4.5% | 4.75% | 5.01% |
a) Value a 3-year default-free zero-coupon bond with a $1000 face value. b) What is the yield to maturity of the bond in a)? c) Find the coupon rate of a risk-free bond with annual coupons and a face value of 100 USD. The price of the bond is 130 USD and it has 3 years to maturity. d) Explain the relation between expected return and yield to maturity for risky bonds.
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Financial Markets And Institutions
Authors: Jeff Madura
9th Edition
1439038848, 978-1439038840
