Hi! I got
stuck on a homework question and would very much appreciate some help with this. So pricing bonds in general is not that bad or hard, but it feels like this particular question is turning everything inside out.
"All of the bonds has a face value of 100 and are otherwise identical (the only difference between them is that which you can read in the tab). You can think of the bonds as government bonds. Use the information in the tab to fill in the blanks (i.e. the numbers 1-6). The numbers (1), (2), (3), (4), (5) and (6) is one possible order in which you can solve the missing information. All answers are to include 2 decimals. Both the coupon rate and the interest rate are annually (per year). Take the law of on price into consideration (otherwise it is not possible to solve the entire task)".
So that is basically all the information we are given. I managed to solve (1) which I got to 101,86 and (2) where I got 3,09 %, I believe they are correct answers for (1) and (2) but let me know if they are not.
First bond: Price = Sum of future Cash Flows = Coupon 1 / ( 1 + Interest Rate) + (Coupon + Face Value) / (1 + Interest Rate)... View the full answer