Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter12: Investing In Stocks And Bonds
Section: Chapter Questions
Problem 10FPE
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Question
Please use this information for the next 2 questions.
At your favorite bond store, UWM Bonds, you see the following prices:
- One year zero selling for $90.29
- Three year 10% coupon $1,000 par bond selling for $1,000
- Two year 11% coupon $1,000 par bond selling for $1,000
Assume that the expectations theory of interest rates holds, no liquidity premium exists, and that the bonds are equally risky and liquid. What is the current one-year rate?
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