Calculate the price of a zero coupon bond that matures in 20 years if the market interest rate is 8.5 percent. (Assume annual compounding and a par value of $1,000.)

Using an annual effective interest rate of 10%, the Macaulay Duration (in years) of a 10-year 100 par value bond with annual coupons of X is 6.96 years. Calculate X. Give your answer as a decimal rounded to two places (i.e. X.XX).

Calculate the value of a $1,000 bond which has 10 years until maturity and pays annual interest at an annual coupon rate of 10 percent. The required return on similar-risk bonds is 12 percent.

Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with a 4.0% coupon if it is currently selling at par and the probability distribution of its yield to maturity a year from now is as shown in the table below. (Assume the entire 4.0% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) Note: Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Economy Boom Normal Growth Recession Probability 0.25 0.50 0.25 YTM 10.0 % $ 9.0 % 8.0 % Capital Gain 43.44 $ (56.56) Price $ Coupon Interest 4.00 HPR (52.56) % % %