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3 years ago

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A risk-free, zero-coupon bond with a $5000 face value has ten years to maturity. The bond currently trades at $3650. What is the

yield to maturity of this bond

1 answer:

PtichkaEL [24]3 years ago

5 0

Answer:

The Yield to Maturity of the bond is YTM = 3.20%

Explanation:

Mathematically the Yield to Maturity of the bond YTM is as follows

$YTM = \frac{C + \frac{F-P}{n} }{\frac{F+P}{2} }$

Where C is the amount of payment to be made = $0

P is the price i.e the present value =$3650

F is the face value of the bond=$5000

n is the year of maturity of the bond = 10 years

$YTM = \frac{0+\frac{5000-3650}{10} }{\frac{5000+3650}{2} } * \frac{100}{1}$

$=3.20$ %

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1)

given initial length, $L=1275\ m$

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2)

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$\Delta V=V.\beta.\Delta T$

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$\Delta V$ = change in volume

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initial temperature of steel tank, $T_{Si}=15^{\circ}C$

initial temperature of gasoline, $T_{Gi}=15^{\circ}C$

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a)

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$\Delta T_G=T_{Gf}-T_{Gi}$

$\Delta T_G=25-15$

$\Delta T_G=10^{\circ}C$

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$\Delta V_G= V_G.\beta_G.\Delta T_G$

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b)

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$\Delta T_S=T_{Sf}-T_{Si}$

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$\Delta V_S=60\times 35\times 10^{-6}\times 10$

$\Delta V_S=0.021\ L$

c)

Quantity of gasoline spilled after the given temperature change:

$V_0=\Delta V_G-\Delta V_S$

$V_0=0.57-0.021$

$V_0=0.549\ L$

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