Suppose prevailing spot rates ares1 03 one years2 04 two, Ask an Expert

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Suppose prevailing spot rates are

S1 = .03 (one year)

S2 = .04 (two years)

S3 = .045 (three years)

S4 = .05 (four years)

a. Valuing the coupons at the appropriate spot rate, find the price of a 4 year bond for which F=C=50000 and whose annual coupons are 2400.

b. At the price of part a, what is the actual annualized rate of return for the bond when held to maturity?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93051112

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