Suppose that the prices of zero-coupon bonds with various maturities
Question: Suppose that the prices of zero-coupon bonds with…
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000.
Maturity(Years) | Price |
1 | $968.16 |
2 | 878.39 |
3 | 812.92 |
4 | 749.00 |
5 | 675.46 |
- how could you construct a 1-year forward loan beginning in year 3? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” & “%” signs in your response.)
Face value | $ |
Rate of synthetic loan | % |
- how could you construct a 1-year forward loan beginning in year 4? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” & “%” sings in your response.)
Face Value | $ |
Rate of synthetic loan | % |