Hello, can you answer these 5 multiple choice questions? thank you, i appreciate

Question

Hello, can you answer these 5 multiple choice questions? thank you, i appreciate it.

I. Zero Coupon Yields Here is a Treasury spot yield curve from the Brokertec platform: Maturity (Yrs) Coupon Price YTM 3.00 100.24332.75 3.50 101.1497 2.90 3.90 4.20 102.9455 3.20 4 1. What is the yield to maturity of the 04-year bond: (a) 4.99; (b) 7.26; (c) 3.40; (d) 4.50; 2. What is the market price of the 03-year bond: (a) 101.0913; (b) 101.9724; (c) 100; (d) 104.20; 3. What is the zero coupon yield on the 02-year: (a) 2.75; (b) 2.90; (c) 3.21; (d) 7.47; 4. What is the zero coupon yield on the 03-year: (a) 3.21; (b) 2.90; (c) 3.40; (d) 2.75; 5. What is the zero coupon yield on the 04-year: (a) 100.2433; (b) 11.87; (c) 3.20; (d) 3.42;

Explanation / Answer

1) YTM can be calculated using I/Y function on a calculator

Insert N = 4, PMT = 4.2, PV = -102.9455, FV = 100 => Compute I/Y = 3.40% is the YTM. Hence, c is correct

2) Bond Price can be calculated using PV function

N = 3, PMT = 3.9, I/Y = 3.2%, FV = 100 => Compute PV = $101.9724 is the bond price. Hence, b is correct.

3) Zero coupon yield is almost equal to yield to maturity for the same maturity coupon bond. Hence, 2.9% is correct

4) Similarly, a is correct

5) Similarly, d is correct.

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