Zero bond return 2

CFA Level I
#21

yup

#22

pepp Wrote: ------------------------------------------------------- > vbcfa Wrote: > -------------------------------------------------- > ----- > > pepp Wrote: > > > -------------------------------------------------- > > > ----- > > > n = 20 and i= 5 inn your math, you’ll get FV > = > > > 132 > > > then you add 98 to it. > > > > > > i don’t think this is a semiannual pay bond > > for exam all bonds are semiannual unless otherwise > noted. Is this really true?

#23

yeap.

#24

Thanks guys/gals

#25

2 more stupid questions… Why do you use 0 for PV instead of Par 100? and how come you take it to the power of .1?

#26

b/c i was valuing the coupon payments separately .1 = 1/10. you’re finding the geometric mean for the compounded rate of return over the period (10 yrs).