ield to maturities, par values and market prices for government securities (with annual interests) are given in the following table: Maturity (Years) Yield to maturity Par Value (K) Market Price (K) 1 3% 100 101.25 2 4% 100 103.50 3 5% 100 104.25 Assuming that the yields to maturities are equal to the coupon rates, calculate the one year, two year and three year spot rates.
ield to maturities, par values and market prices for government securities (with annual interests) are given in the following table: Maturity (Years) Yield to maturity Par Value (K) Market Price (K) 1 3% 100 101.25 2 4% 100 103.50 3 5% 100 104.25 Assuming that the yields to maturities are equal to the coupon rates, calculate the one year, two year and three year spot rates.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 4P: Determinant of Interest Rates
The real risk-free rate of interest is 4%. Inflation is expected to be...
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QUESTION TWO
Yield to maturities, par values and market prices for government securities (with annual interests) are given in the following table:
|
Maturity (Years) |
Yield to maturity |
Par Value (K) |
Market Price (K) |
|
1 |
3% |
100 |
101.25 |
|
2 |
4% |
100 |
103.50 |
|
3 |
5% |
100 |
104.25 |
Assuming that the yields to maturities are equal to the coupon rates, calculate the one
year, two year and three year spot rates.
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