Answer the Following Questions That Relate to Bonds

question 38

Essay

Answer the following questions that relate to bonds.
A 2-year zero-coupon bond is selling for $890.00.What is the yield to maturity of this bond
The price of a 1-year zero-coupon bond is $931.97.What is the yield to maturity of this bond
Calculate the forward rate for the second year.
How can you construct a synthetic one-year forward loan (you are agreeing now to loan in one year)
State the strategy and show the corresponding cash flows.Assume that you can purchase and sell fractional portions of bonds.Show all calculations and discuss the meaning of the transactions.

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Definitions:

Behavioral Activation

A therapy technique that focuses on engaging individuals in activities that are likely to elicit positive reinforcement thus improving mood and reducing depression.

Cognitive Therapy

A form of psychotherapy that focuses on changing unhealthy thinking patterns to improve emotional regulation and develop personal coping strategies.

Depression

A common and serious medical illness that negatively affects how you feel, the way you think, and how you act, characterized by persistent feelings of sadness and/or a loss of interest in activities.

Equivalent Outcomes

A concept suggesting that different therapeutic approaches may yield similar results.