Given Solve for Bond maturity (in years, given) Coupon rate (given) Bond price (

Question

Given Solve for Bond maturity (in years, given) Coupon rate (given) Bond price (given) Zero-coupon discount factor (calculated) Zero-coupon yields (calculated) Coupon yields (calculated) 0.5 0% 98.04 1 4.00% 100.00 1.5 6.00% 102.00 2 7.00% 102.50 2.5 6.00% 101.00 3 4.00% 100.00

Given Solve for and Using Zero coupon DFs solve for price and yields Zero-coupon Coupon yields Bond maturity (in years, given) Zero-coupon discount factor Coupon rate (given) 0% 4.00% 6.00% 7.00% 6.00% 4.00% Bond price yields iven Amount coupon Maturity Solve For Price YTM (IRR) 100 100 100 2.50% 2.00 100 5.00% 1.50 100 100 2.50% 3.00 Caiculated) (calculated (calculated 0.5 98.04 100.00 102.00 102.50 101.00 100.00 5.00% 10.00% 10.00% 2.00 2.00 2.50 1.5 2.5

Explanation / Answer

Bond maturity Coupon rate Bond price Zero coupon discount factor Zero coupon yields Coupon yields 0.5 0% 98.04 0.9804 4.00% 4.00% 1 4% 100 0.961168627 4.00% 4.00% 1.5 6% 102 0.93374072 4.62% 4.60% 2 7% 102.5 0.893105481 5.73% 5.66% 2.5 6% 101 0.870822869 5.61% 5.57% 3 4% 100 0.889426712 3.94% 4.00% Amount 100 100 100 100 100 100 Coupon 5% 10% 2.50% 5% 10% 2.50% Maturity 2 2 2 1.5 2 3 Price 98.73158517 108.15262 94.02106664 100.5623453 108.1526222 95.8535 YTM 5.680% 5.633% 5.706% 4.608% 5.633% 3.980%

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