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My name is Ann [436]
3 years ago
13

Treasury spot interest rates are as follows: Maturity (years) 1 2 3 4 Spot rate (EAR) 1.4% 2.8% 3.6% 4.5% What is the price of a

risk-free zero-coupon bond with 3 years to maturity and a face value of $1,000 (in $)? (answer,0+ decimals)
Business
1 answer:
Salsk061 [2.6K]3 years ago
8 0

Answer: $868

Explanation:

Given the following :

Maturity (years) - - - - - - 1 - - 2 - - - 3 - - - 4

Spot rate (EAR) - - - - 1.4% - 2.8% - 3.6% - - 4.5%

What is the price of a risk-free zero-coupon bond with 3 years to maturity and a face value of $1,000 (in $)?

Face value / ( 1 + spot rate)^p+1

Where P = year

=1000/(1+3.6%)^4

1000 / ( 1 + 0.036)^4

1000/(1.036)^4

1000/1.151964303616

=$868.08245

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Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is C
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