please finish these four questions:
1. A bond that pays interest annually yields a rate of return of 5.25 percent. The inflation rate for the same period is 2 percent. What is the real rate of return on this bond?
2. A zero coupon bond with a face value of $1,000 is issued with an initial price of $502.96. The bond matures in 17 years. What is the implicit interest, in dollars, for the first year of the bond’s life? Use semiannual compounding.
Hint. Compute the ytm as of today, use the ytm to get the price one year from today, take the difference in prices.
3-4
All rates are annual. The one-year zero coupon rate is 4%. The two year zero-coupon rate is 4.5%. The three year zero-coupon rate is 4.25%. The price of a three-year 3% coupon bond with the face value of $1,000 is $ …………{3}………………… (accuracy to one cent) and its yield to maturity is …………{4}………….. percent (enter 3.65% as 3.65 not 0.0365, accuracy at least to two decimals).
3. All rates are annual. The one-year zero coupon rate is 4%. The two year zero-coupon rate is 4.5%. The three year zero-coupon rate is 4.25%. The price of a three-year 3% coupon bond with the face value of $1,000 is $ ………………… (accuracy to one cent)
4. All rates are annual. The one-year zero coupon rate is 4%. The two year zero-coupon rate is 4.5%. The three year zero-coupon rate is 4.25%. Its yield to maturity is ……………….. percent (enter 3.65% as 3.65 not 0.0365, accuracy at least to two decimals).
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