Number 2: Using the interest rate tree below, find the correct price for a three-year, annual-pay bond with a coupon rate of 5%. Three-Year Binomial Interest Rate Tree Time 0 Time 1 Time 2 8.0% 5.0% 2.0% 6.0% 3.0% 4.0%
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- Consider information on the following bonds (with face value 100): Bond Maturity (years) Coupon rate Yield-to-maturity А 1 0% 5.0% В 2 5% 5.5% C 3 6% 6.0% Coupons are paid annually. What is the three-year spot interest rate?Use the table below for the questions that follow, and assume semi-annual interest payments. Bond A B Coupon Rate 6% Zero coupon The duration of Bond B is Yield 4.5% 6.25% Maturity 3 years 7 years ? (round your answer to two decimal places)Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline
- Calculate the value of a 2-year 3.5% annual pay bond given the interest rate below. What is the implied 3-year spot rate? Time Period Forward Rate z1 0.80% 1f1 1.12% 1f2 3.94% 1f3 3.28% 1f4 3.14%Suppose that the term structure of interest rates is: t 0.5 1 1.5 2 r 1% 1.2% 1.4% 1.8% Interest rates are annual interest rates that are semi-annually compounded. 1. Calculate the price and modified duration of a 1-year bond with a 6% coupon rate, with coupons paid semi-annually. The bond has a face value of 100.0 2. Calculate the price and modified duration of a 2-year bond with a 10% coupon rate, with coupons paid semi-annually. The bond has a face value of 100.0 3. Compare your results from 1 and 2 above. Which bond is more sensitive to changes in interest rates?Use the following information to answer Questions 5 and 6 You are given the following binomial interest model. Compounding is annual. t = 0 t = 1 i1,H = 3.6% io = 2% 11,L = 2.8% 5. Bond F is a 2-year 4% annual coupon bond with a face value of $100, callable at time t = 1. Find the price of the call option embedded in Bond F. 6. Bond G is 2-year 2.5% annual coupon bond with a face value of $100, putable at times t = 0, and t = 1. Find the price of the put option embedded in Bond G.
- Question 1: Consider a coupon bond with an 8% annual coupon rate, a 10% interest rate, and a $1000 face value. The bond will mature in 4 years. What is the duration of this bond? Duration is defined as a weighted average of the maturities of the cash payments. Suppose the weight assigned to the maturity of 1 year is W. A: Duration=2.28 and W=7.77% B: Duration=3.56 and W=20.5% C: Duration=3.56 and W=23.1% D: Duration=3.56 and W=7.77%K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {Give only typing answer with explanation and conclusion Price a 3-year, 3.6% annual coupon, $1000 par bond putable at par in year 1 and year 2, using the following calibrated interest rate model. Assume annual compounding. Round your answer to 2 decimal places. t = 0t = 1t = 2 r_2,HH = 6.2% r_1,H = 3.9% r_0 = 1.5% r_2,HL = 4.4% r_1,L = 2.1% r_2,LL = 2.2%
- Suppose a 10% 3years bond with a FV of $1000 Spot rates r1= 10%, r2= 12%, r3=13%. Calculate the forward rate required to calculate the bond price using the forward rate 1f2Using the following spot rate for pricing the bond, what is the present value of a 3- year security that pays a fixed annual coupon of 6%? Year 1: 4.5% Year 2: 5.0% Year 3: 6.0% $1,010 O $1,002 $998Q.consider a bond that has a coupon rate of 7.5 percent semi-annually,5 years to maturity, and is currently priced to yield 7.5%,calculate Macaulay duration.