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15 points Consider two bonds with known pricing; Bond A (price: PA) & Bond B (Price: PB). Find (x,y) such that price of bond C

15 points

Consider two bonds with known pricing; Bond A (price: PA) & Bond B (Price: PB).

Find (x,y) such that price of bond C (Pc) is such that the cashflows given in the following table would solve:

Pc = x.PA + y.PB

Time 0 1 2 Prices

CF:A 0 50 150 PA

CF:B 0 100 100 PB

CF:C 0 0 25 Pc=?

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