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4. The formula for the pricing of a bond is: P=Fc(1-1/(1+r))/r+F/(1+r) where F is the value,c is the coupon rate, r is the discount rate,
4. The formula for the pricing of a bond is: P=Fc(1-1/(1+r)")/r+F/(1+r)" where F is the value,c is the coupon rate, r is the discount rate, and n is the time in years to maturity of the bond. a.Show that P=F is coupon rate is equal to discount rate. b. Show that P>F if the coupon rate is greater than the discount rate
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Public Finance
Authors: Harvey S Rosen, Ted Gayer
9th International Edition
0071267883, 9780071267885
