Question
Use the following information to answer the questions. Suppose we see the following prices for zero-coupon bonds (face value $100) with maturities ranging from one
Use the following information to answer the questions. Suppose we see the following prices for zero-coupon bonds (face value $100) with maturities ranging from one to six years:
| Maturity in years | Bond Price |
| 1 | $98.00 |
| 2 | $97.00 |
| 3 | $95.00 |
| 4 | $92.00 |
| 5 | $88.00 |
| 6 | $84.00 |
a) What is the four-year spot rate?
b) What is the price of a six-year coupon bond that has a face value of $1,000 and an annual coupon rate of 8%? The coupons are paid annually.
c) What is the bonds yield-to-maturity?
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Analysis For Financial Management
Authors: Robert Higgins
6th Edition
0071181172, 9780071181174
