Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 7PROB
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Question
What is the value of a 4-year 4% semi-annual coupon bond if the appropriate yield curve (discount rate for discounting each cash flow) is as in the table attached. Copy and paste your answer from Excel to avoid any rounding issues
![[1]
[2]
Year Period
0.5
1
1
2
1.5 3
2
4
2.5
5
3
6
3.5
7
4
8
4.5
9
5
10
Total
[3]
[4]
Yield Cash Flow
0.077
0.075
0.072
0.066
0.061
0.057
0.05
0.044
0.04
0.035
[5] = 1/(1+[3]/2)^[2]
Discount Factor
[6] =[4]×[5]
PV of CF](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc5ec86e1-c595-42be-9f05-63cb3ab56fe4%2F2f4678cb-af4e-47d6-983a-f6bdfd0dfc59%2Fg7btvc_processed.png&w=3840&q=75)
Transcribed Image Text:[1]
[2]
Year Period
0.5
1
1
2
1.5 3
2
4
2.5
5
3
6
3.5
7
4
8
4.5
9
5
10
Total
[3]
[4]
Yield Cash Flow
0.077
0.075
0.072
0.066
0.061
0.057
0.05
0.044
0.04
0.035
[5] = 1/(1+[3]/2)^[2]
Discount Factor
[6] =[4]×[5]
PV of CF
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