Tuesday, 1 October 2019

Suppose the prices of one-year, two-year, and three-year zero coupon bonds each with a par value of $100

Suppose the prices of one-year, two-year, and three-year zero coupon bonds each with a par value of $100 are $90,$80, and $70, respectively.
A dealer has a three-year bond in her inventory with 10% coupon rate and par value of $1000. Use the given information on zero-coupon bonds to value this bond.

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