As corporate treasurer, you have to pay $21 million in one year and again in two years. Bonds of all maturities currently yield 7%. If you buy zero-coupon bonds with a maturity equal to the duration calculated in the previous part, what should be their combined face value (in $)?

As corporate treasurer, you have to pay $21 million in one year and again in two years. Bonds of all maturities currently yield 7%. If you buy zero-coupon bonds with a maturity equal to the duration calculated in the previous part, what should be their combined face value (in $)?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

As corporate treasurer, you have to pay $21 million in one year and again in two years. Bonds of all maturities currently yield 7%.

If you buy zero-coupon bonds with a maturity equal to the duration calculated in the previous part, what should be their combined face value (in $)?

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