a) Frantz Jones seeks your assistance to help him calculate the price of a two-year annual coupon
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Question:
a) Frantz Jones seeks your assistance to help him calculate the price of a two-year annual coupon bond where the yield is 9%, 10% and 11% at year 1, 2 and 3 respectively.Assume the coupon rate is 6% and the face value is $1,000:
b) State clearly the formula for determining the price of the bond in terms of its yield to maturity?
c) Is the yield at year 2 greater or less than the yield to maturity at year 2? And if so, why?
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