Suppose that the prices of zero-coupon bonds with various maturities

jagguarpaw January 11, 2017 0 Comments

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

 

  1. 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 %

 

  1. 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 %