Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 23PS
A T-hill with face value $10.000 and 87 days to maturity is selling at a bank discount ask yield of 3.4%. (LO 2-1)
a. What is the price of the bill?
b. What is its bond equivalent yield?
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The price of a newly issued 3-month T-bill with a face value of $1,000 is $992. A) What is the bond-equivalent yield? B) What is the discount yield?
H5.
Which of the following is the name of the semiannual payment of $20 that you receive on a bond you own?
a. Face Value
b. Discount
c. Yield
d. Call Premium
e. Coupon
Explain with details and also explain wrong options
7. What is the fundamental value of this corporate bond?
N=3, 1/Y = 1.25%, PMT= $55, FV = $1,000
Probability of default on each cash flow is 2.5%
You get $0 PMT if default occurs
Use expected value and risk free rate (1.25%) to solve
Chapter 2 Solutions
Essentials Of Investments
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