Question
The YTM on a 6-month $20 par value zero-coupon bond is 18%, and the YTM on a 1-year $20 par value zero-coupon bond is 20%.
The YTM on a 6-month $20 par value zero-coupon bond is 18%, and the YTM on a 1-year $20 par value zero-coupon bond is 20%. These YTMs are semiannual BEYs. What would be the arbitrage-free price of a 1-year bond with coupon rate of 20% (semiannual payments) and par value of $1000? Assume that this bond is issued by the same company as the zero-coupon bonds.
Round your answer to 2 decimal places.
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The Financial System Financial Regulation And Central Bank Policy
Authors: Thomas F. Cargill
1st Edition
1107035678, 9781107035676
