Revision as of 09:45, 22 November 2023 by Admin (Created page with "'''Solution: A''' Suppose the quarterly yield rate on the zero coupon bond is <math>\mathrm{j}</math>. Thus for the zero coupon bond <math>\mathrm{j}</math> would equal: <math display="block"> \begin{aligned} & 1,050=1600 \mathrm{v}^{68} \\ & \mathrm{v}^{68}=.65625 \\ & \mathrm{j}=.00621 \end{aligned} </math> Price of the coupon bond would be: <math display="block"> \begin{aligned} & 1600 \mathrm{v}^{52}+1600(.02) \mathrm{a}_{\overline{52} | .00621} \\ & =2,577.94...")
Exercise
ABy Admin
Nov 22'23
Answer
Solution: A
Suppose the quarterly yield rate on the zero coupon bond is [math]\mathrm{j}[/math].
Thus for the zero coupon bond [math]\mathrm{j}[/math] would equal:
[[math]]
\begin{aligned}
& 1,050=1600 \mathrm{v}^{68} \\
& \mathrm{v}^{68}=.65625 \\
& \mathrm{j}=.00621
\end{aligned}
[[/math]]
Price of the coupon bond would be:
[[math]]
\begin{aligned}
& 1600 \mathrm{v}^{52}+1600(.02) \mathrm{a}_{\overline{52} | .00621} \\
& =2,577.94
\end{aligned}
[[/math]]
Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.