Today is 2017 jan 1st. In this economic, no bond default risk and zero-inflation. also all coupon is distributed once annually.
Information
- 2 year maturity coupon bond's coupon rate=current yield=5%
- 1 year maturity zero coupon bond's YTM=2year maturity zero coupon bond's YTM
-3 year maturity zero coupon bond's price is $1/(1.06)^3 (par value=$1)
1) draw 2017 jan 1st's pure yield curve for each 1, 2, and 3 year maturity
2) what is 2019's forward rate?
3) if there are no uncertainty in this economic, what is price of 2019 jan 1st's 1year maturity zero coupon bond? (par value=$1 )
4) using above information, what is 2017 jan 1st's 3year maturity coupon bond price? (par value=$1000, coupons=6%)