(a) You are given the following information about two 10-year bonds. Both bonds have face amount 100 and coupons payable semi-annually, with next coupon due in 1/2-year. Bond 1: Coupon rate 4% per year, price 85.12 Bond 2: Coupon rate 10% per year, price 133.34. Find the yield rate for a 10-year zero coupon bond.
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- Bond 1: Coupon rate = 4% per year, Price = 85.12, Face value = 100, Semi-annual coupon = 2 (since 4% per year means 2% every 6 months). - Bond 2: Coupon rate = 10% per year, Price = 133.34, Face value = 100, Semi-annual coupon = 5 (since 10% per year means 5% Show more…
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