Exercise
ABy Admin
Nov 19'23
Answer
Solution: B.
Using spot rates, the value of the bond is: 60 /1.07 + 60 /1.083 + 1060 /1.093 = 926.03.
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
You are given the following information with respect to a bond:
You are also given that the one, two, and three year annual spot interest rates are 7%, 8%, and 9% respectively.
Calculate the value of the bond.
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
Solution: B.
Using spot rates, the value of the bond is: 60 /1.07 + 60 /1.083 + 1060 /1.093 = 926.03.
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.