Summer 2018 FIN 150 Business Finance Grace Len 1 6/29/18 4:03 PM Homework: Chapt

Question

Summer 2018 FIN 150 Business Finance Grace Len 1 6/29/18 4:03 PM Homework: Chapter 7 Graded Homework Score: 0 of 1 pt Problem 7.LO2.8 (similar to) The table below shows market prices for four zero coupon bonds with four different terms: 41 of 16 (0 complete) Hw Score: 0%, 0 of 16pts Question Help one, two, three and four years. The bonds all ave a face value of $1,000. Caloulate the yields on the zero coupon bonds and graph the yield ourve. What is the shape of the yield curve? Zero Coupon Bond Prices Term (years) Price (S) 943.40 890.00 839.62 92.09 3 What is the yield on the zero coupon bond with a 1-year term? 1% (Round to the nearest integer.)

Explanation / Answer

using Financial calculator PMT 0 N= 22 I/Y= 5.50% FV= 1000 Press CPT and PV PV= $307.93 2nd way Bond price PV factor Current price 1000 0.307926 307.93

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