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Suppose you are interested in buying a one - year bond and your options are Dubai Government Bond and Sharjah Government Bond. The Dubai Government
Suppose you are interested in buying a oneyear bond and your options are Dubai Government
Bond and Sharjah Government Bond. The Dubai Government Bond has a face value of AED
and pays per year coupon rate at maturity. The Sharjah Government Bond also has an AED
face value but pays per year coupon rate at maturity. Other things equal, if you prefer
the Dubai Government bond, how much is the maximum you will you be willing to pay for it so that
your return is equal to the return that you would obtain by buying the Sharjah Government bond?
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