Exercise 4.1 Suppose that the current time is 0 and that the current forward rate of the default-free discount bonds is given by

Consider a coupon-bearing bond with 5 yen coupons and a face value of 100 yen. Coupons will be paid semiannually and the maturity of the bond is 4 years. Supposing that the bond is issued today and the interest is the continuous compounding, obtain the present value of the coupon-bearing bond.

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f(0,t) = 0.01+0.005 xt, t 0.