You see a two year bond with annual coupon rate of 8% that has these flows. Years ahead Cashflows 0 0.25 ?? 0 0.5 0.75 0 0 1 8 1.25 0 1.5 0 1.75 0 2 108 You will be asked to calculate its price at times 0, 0.5 and 0.75 years ahead, i.e. now and with 1.5 and 1.25 years left. Part year rates are 2% per quarter which is also called 8% quarterly and is equivalent to 8.243% annual.