Question
In the bond market you are given the following information. All amounts are in the US dollar. CF stands for cash flows and all bonds
In the bond market you are given the following information. All amounts are in the US dollar. CF stands for cash flows and all bonds mature in Year 3. One can buy or sell only integer quantity of bonds. Based on the no-arbitrage principle, what is the price of Bond C today? In other words, what is X?
| Price Today | CF Year 1 | CF Year 2 | CF Year 3 | |
| Bond A | 95.00 | 6 | 6 | 106 |
| Bond B | 107.00 | 11 | 11 | 111 |
| Bond C | X | 7 | 7 | 107 |
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Public Finance In Canada
Authors: Harvey S. Rosen, Wen, Snoddon
4th Canadian Edition
0070071837, 978-0070071834
