question archive A dryear zero coupon bond has a face value of $100 and a price of $85480
A dryear zero coupon bond has a face value of $100 and a price of $85480
Subject:FinancePrice: Bought3
A dryear zero coupon bond has a face value of $100 and a price of $85480. The table below contains prices, coupons and time to maturity for 3 annual coupon paying bonds thal have a face value of $100. Time to Maturi ears Annual Cou n Price 1 3.0% $99038 2 8.5% $1 08.487 3 6.5% $1 06.93? Please use 3 decimal places in your working. 2a) What is the pnce of a 3—year bond paying annual coupons of 4% and a face value of $100? 2b) If you had $1million invested in the 3—year 4% coupon bond, how many of lhe Alwyear zero—coupon bonds would you need to short—sell to hedge your inlerest rate risk? I
