The current price of the bond equals the present value of all future cash flows. Those cash flows are of 2 kinds: 1) Coupon Payments, and 2) Face Value paid at maturity Bond L: Face Value = $1,000, Coupon Payment = $100, maturity = 15 Bond S: Face Value = $1,000, Coupon Payment = $100, maturity = 1 ) Interest Rate = 5% Bond L: = ($100 x 10.3797) + ($1,000 x 0.481) = $1,037.97 + $481.017 = $1,518.98 trying to understand where the 10.37 came from