spot rate - question

can u give me the calc to getting 175 pls

i get 171… 925.61 * (1.03^20) = 1671.75 1671.75 - 500 - 1000 = 171…

Dont have the calculation…only answer is given… You are very close.

well the questions says “closest to” so i’m gonna go with my calculations (171) (please say i did the calcs right…)

yes, your inputs are correct…

woot!

One more BOND question ( I promise last one ) A newly issued 10 year option free bond is valued at par on june 1 2000, annual coupn of 8%. On june 1 2003 the bond has YTM of 7.1%. The first coupon is re-invested at 8% and second at 7%. the future price of bond on june 1, 2003 is closet too?

Options: 100% at par 102.5% at par 104.8% at par 105.4% at par

it is 104.8% at par how? pmt 80, n=7, fv=1000, 1/y =7.1% calculate pv 1048.33/1000*100 = 104.83 (ignore -ve sign)

Yeah. The coupons that take place earlier have nothing to do with the market value at 2003.

yep, just there to throw u off…104.8