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You own a $1,000-par zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and believe that
You own a $1,000-par zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and believe that the required yield next year will have the following probability distribution: Probability Required Yield 0.3 6.60% 0.5 7.00% 0.2 7.20% 1 What is your expected price when you sell the bond? Please specify each step of your calculation. 2 What is the standard deviation? Please specify each step of your calculation
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