Question: An analyst needs to value a 3 year, 5% annual coupon payment bond, which is not actively traded. The analyst was able to find two

An analyst needs to value a 3 year, 5% annual coupon payment bond, which is not actively traded. The analyst was able to find two other bonds with comparable credit quality.

Bond 1: 2 year, 4.5% annual coupon payment bond at a price of $110.

Bond 2: 5 year, 5.5% annual coupon payment bond at a price of $108.

Suggest a pricing method and provide the value of the bond in question according to it.

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