It is 25 July 2022; you observe two treasury bills Price 99.7985 25 March 2023 98.3855 Maturity 25 September 2022 (a) What are appropriate discount factors for 2 months and 8 months? (b) What are the spot rates, with semi-annual compounding, for 2 months and 8 months? (c) What would be a fair price for a bond, maturing on 25 March 2023, paying a 5% per annum coupon rate, with a semi-annual coupon?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter2: The Domestic And International Financial Marketplace
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a b and c please thank you

It is 25 July 2022; you observe two treasury bills
Maturity
Price
25 September 2022 99.7985
25 March 2023 98.3855
(a) What are appropriate discount factors for 2 months and 8 months?
(b) What are the spot rates, with semi-annual compounding, for 2 months
and 8 months?
(c) What would be a fair price for a bond, maturing on 25 March 2023,
paying a 5% per annum coupon rate, with a semi-annual coupon?
Transcribed Image Text:It is 25 July 2022; you observe two treasury bills Maturity Price 25 September 2022 99.7985 25 March 2023 98.3855 (a) What are appropriate discount factors for 2 months and 8 months? (b) What are the spot rates, with semi-annual compounding, for 2 months and 8 months? (c) What would be a fair price for a bond, maturing on 25 March 2023, paying a 5% per annum coupon rate, with a semi-annual coupon?
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