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Section 2 -Long Answer Problems - Each of the 3 problems is worth 10 points. Show your work clearly as partial credit will be awarded.
Section 2 -Long Answer Problems - Each of the 3 problems is worth 10 points. Show your work clearly as partial credit will be awarded. #1. A one year zero coupon bond with face value $1,000 sells for S960, a two-year zero coupon bond with a face value of $1,000 sells for $920. Suppose a new coupon paying bond, making annual coupon payments, is issued today with face value $1,000, maturity of 2 years, and annual coupon payments of 6%. (a) Calculate the price of the coupon paying bond today. n that co (b) Let y represent the yield to maturity on the coupon bond. Write down an algebraic equation th be solved to calculate y. You do not need to solve the equation, just set it up algebraically
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