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You have estimated spot rates as follows: r 1 = 6.40%, r 2 = 6.80%, r 3 = 7.10%, r 4 = 7.30%, r 5
You have estimated spot rates as follows:
r1= 6.40%, r2= 6.80%, r3= 7.10%, r4= 7.30%, r5= 7.40%.
a. What are the discount factors for each date (that is, the present value of $1 paid in year t)? (Do not round intermediate calculations. Round your answers to 3 decimal places.)
year | Discount Factor |
1 | |
2 | |
3 | |
4 | |
5 |
b. Calculate the PV of the following $1,000 bonds assuming an annual coupon and maturity of : (i) 6.4%, two-year bond; (ii) 6.4%, five-year bond; and (iii) 11.4%, five-year bond. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
i | 6.4% twoyear bond |
|
Ii | 6.4%fiveyear bond | |
iii | 11.4%five year bond | |
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