Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a $1,000 par, 4% coupon bond maturing in one and a half years (the next coupon is exactly six months from now)?
Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a $1,000 par, 4% coupon bond maturing in one and a half years (the next coupon is exactly six months from now)?
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 10P
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Question
Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are
1%,
1.1%,
and
1.3%,
all quoted as semiannually compounded APRs. What is the price of a
$1,000
par,
4%
coupon bond maturing in one and a half years (the next coupon is exactly six months from now)?
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