Consider a 9 month zero coupon bond of face value 1000, it it’s presently trading at 917, what is the EAR?
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Is the answer 12.25%.. please share the answer.
Yes that is the correct ans.
PV= 917
Fv= -1000
N= 0.75
CPT I/Y 12.24686
THIS CAN ALSO BE DONE BY TAKING N=9, THEN I/Y WILL BE EPR MULTIPLY IT BY 12 WE WILL GET SAR, THEN CONVERT IT TO EAR WE WILL GET 12.24686. THE FIRST METHOD IS SIMPLE,YOU CAN USE SECOND METHOD TO CROSS VERIFY
Thank you.
FV=1000
PV=-917
N=.75
CPT I/Y
12.2469
Thank you.
FV = 1000
PV= -917
N = 9/12 = 0.75
CPT I/Y
The answer is 12.24686%
Thank you.