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A one year zero coupon bond is trading at $0.9 per dollar of face value. A two year zero coupon bond is trading at $0.85
A one year zero coupon bond is trading at $0.9 per dollar of face value. A two year zero coupon bond is trading at $0.85 per dollar of face value. What is the no-arbitrage price of a two year coupon bond with a face value of $10 and an annual coupon rate of 10%?
a) $10.
b) $10.25
c) $10.50
d) $10.75
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