Prices for zero-coupon government of canada bonds each with, Finance Basics

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Prices for zero-coupon government of canada bonds each with

Question: Prices for zero-coupon government of canada bonds, each with a face value of $100, are observed for different terms to maturity as follows:

Price of 1 year Zero = $97.56

Price of 2 year Zero = $94.26

Price of 3 year Zero = $88.90

a. Calculate the spot rate ( yield to maturity) for each of the zero coupon bonds

NOW CONSIDER A 3 YEAR 8% COUPON BOD PAYING ANNUAL COUPONS WITH A FACE VALUE OF $1000.00

b. What is the price of the ebond?

c. What is the yield to maturity

d. How will the bonds price change as we approach the end of the first year, and the payment of the first coupon? Explain.

e. How will the bonds price change immedietly after the first coupon is paid? Explain

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