8.2

Bond #	1	2	3	4
	1-year strip bond	2-year strip bond	2-year 6% coupon bond	2-year 7% coupon bond
Purchase price ($xxxx.xx)	950.00
Time 1 cash flow	+1000.00	0	+60.00	+70.00
Time 2 cash flow	0	+1000.00	+1060.00	+1070.00
Yield to maturity (xx.xx%)			5.50%

5. How many units of Bond #1 and #2 would you need to replicate the future cash flows of 1000 units of Bond #4? (2 marks)
6. Using your answer to part e above, determine the following

i. Whats the value of 1000 units of Bond #4? (2 marks)

ii. Whats the yield of Bond 4? (2 marks)