Given the following spot rates, calculate the value of a 3-year, 6% annual-coupon bond. Spot rates:   1-year: 5% 2-year: 5% 3-year: 6%     A.   $1,001.56   B.   $1,044.73   C.   $1,094.56   D.   $1,114.29

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Given the following spot rates, calculate the value of a 3-year, 6% annual-coupon bond.

Spot rates:

 

  • 1-year: 5%
  • 2-year: 5%
  • 3-year: 6%

 

 

A.

 

$1,001.56

 

B.

 

$1,044.73

 

C.

 

$1,094.56

 

D.

 

$1,114.29

Expert Solution
Given Information:

Time period is 3 years

Annual Coupon rate is 6%

Finance homework question answer, step 1, image 1

To Find:

  • Value of the bond
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