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can i see handwritten workout and solution please Problem 3. (20 Points) Obi-Wan Kenobi has decided to invest in two bonds issued by the treasury
can i see handwritten workout and solution please
Problem 3. (20 Points) Obi-Wan Kenobi has decided to invest in two bonds issued by the treasury of Galactic Republic. Bond X is an n-year bond with semi-annual coupons, while bond Y is zerocoupon bond (i.e., a bond providing no coupons, but only a redemption amount at time of maturity), which is redeemable in n/2 years. The desired yield rate is the same for both bonds. Obi-Wan also has the following information: Bond X - Face amount F is 1000 ; - The ratio of the semi-annual bond rate and the semi-annual yield rate is jr=1.03125; - The present value of the redemption amount is 381.5 . Bond Y - The redemption amount (C) is the same as that of bond X; - The present value of the redemption amount is 647.8 . What is the price of bond X ? (HINT: you can solve for the redemption amount C, which is the same for the two bonds, and the present value factor vjn using the redemption amount present values equations of the two bonds.)Step by Step Solution
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