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NEW QUESTION: 1
IGMP protocol is implemented on which layer of TCP/IP protocol?
A. Physical layer
B. Application layer
C. Transmission layer
D. Link layer
E. Network layer
Answer: E

NEW QUESTION: 2
The yield offered by a bond with 18 months remaining to maturity is 5%. The coupon is 3%, paid semi-annually, and there are two more coupon payments to go in addition to the interest payment made at maturity. The zero rate for 6 months is 2%, that for 12 months is 3%. What is the 18 month zero rate?
A. 4.03
B. 5.03%
C. 6.03%
D. 4.81%
Answer: B
Explanation:
Explanation
This is a two step problem:
First, calculate the bond price using the yield information, then
Second, once you know the bond price, calculate the 18 month zero rate using the bootstrap method.
Step 1: Bond valuation: All variables required for pricing the bond are known. The coupon payments will be
$1.50 in 6 months and 1 year from now, and a final paymento of $101.50 will be received in an year's time.
This can be discounted at the yield provided as follows, and summed together to get the bond price of $97.14.
Step 2: Boot strapping: Discount the 6 month and 12 month coupons at the zero rates for those periods, and subtract the total of these PVs from the bond price. These work out to 1.5/(1+2%/2) = 1.485, and
1.5/(1+3%/2)