Q15. The FIM bank has issued two bonds, the first bond is a 3-year coupon paying bond with 10% of coupon rate. The second bond is a 30-year zero-coupon bond. The face value for two bonds are $100. Assume the yield curve is flat and the yield to maturity is 10%. Which of the following is correct? The bond price for the second bond is $5.73, and the duration for the second bond is 29.5 years The bond price for the first bond is $85.3, and the duration for the first bond is 2.73 years The bond price for the first bond is $98, and the duration for the first bond is 2.73 years The bond price for the second bond is $5.73, and the duration for the second bond is 30 years The bond price for the first bond is $100, and the duration for the first bond is 3 years
Q15. The FIM bank has issued two bonds, the first bond is a 3-year coupon paying bond with 10% of coupon rate. The second bond is a 30-year zero-coupon bond. The face value for two bonds are $100. Assume the yield curve is flat and the yield to maturity is 10%. Which of the following is correct? The bond price for the second bond is $5.73, and the duration for the second bond is 29.5 years The bond price for the first bond is $85.3, and the duration for the first bond is 2.73 years The bond price for the first bond is $98, and the duration for the first bond is 2.73 years The bond price for the second bond is $5.73, and the duration for the second bond is 30 years The bond price for the first bond is $100, and the duration for the first bond is 3 years
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 13PROB
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Q15. The FIM bank has issued two bonds, the first bond is a 3-year coupon paying bond with 10% of coupon rate. The second bond is a 30-year zero-coupon bond. The face value for two bonds are $100. Assume the yield curve is flat and the yield to maturity is 10%. Which of the following is correct?
The bond price for the second bond is $5.73, and the duration for the second bond is 29.5 years
The bond price for the first bond is $85.3, and the duration for the first bond is 2.73 years
The bond price for the first bond is $98, and the duration for the first bond is 2.73 years
The bond price for the second bond is $5.73, and the duration for the second bond is 30 years
The bond price for the first bond is $100, and the duration for the first bond is 3 years
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