1)What price would a fund manager be prepared to purchase a 60 day T Note ,if...
1)What price would a fund manager be prepared to purchase a 60 day T Note ,if the current yield is 8.25% annum with $1000 face value?
2)what is the present value of an annuity of $500 paid annually over 5 years with the first payment to be received at the end of first year and with a yield currently of 8% annual?
Homework Answers
1
N = 60/365 = 0.164383561643836
| K = N |
| Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N |
| k=1 |
| K =0.164383561643836 |
| Bond Price =∑ [(0*1000/100)/(1 + 8.25/100)^k] + 1000/(1 + 8.25/100)^0.164383561643836 |
| k=1 |
| Bond Price = 987.05 |
| Please ask remaining parts seperately, questions are unrelated |
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