https://venus.cs.qc.cuny.edu/~smane/cs365/lectures/CS365_765_lecture2.pdf

-0.12305670 1 Question 1 Consider a bond with a maturity of four years. Suppose the bond pays semiannual coupons (two coupons per year) Hence the coupons are paid at times t-0.5, 1.0,... 4.0 Let the bond face be F and the annualized coupon rates be ci,..., cs and the yield be y . The face value of the bond is F 100 . The coupon values are given by the digits of your student id, i.e. cid . The current time is to= 0.5+3. . Fill in the table below with the values of B((answers to two decimal places). 2 (2 d.p 8 (2 d.]p . Let the market price of the bond be Bmarket 100+ B Denote the yield corresponding to Bmarket be y. I. State which pair (y,y+2) gives a lower and upper bound for y*. 2. Call these values ow and high,SO highl2 and define ymid-(now yhigh)/2.0. 3. Calculate the bond price B(ymid). State the updated values of yow and yhigh for t 5. Calculate the updated value of ymid and the updated bond price B(mid). 6. STOP. No credit will be awarded if you attempt to iterate further the next iteration step. -0.12305670 1 Question 1 Consider a bond with a maturity of four years. Suppose the bond pays semiannual coupons (two coupons per year) Hence the coupons are paid at times t-0.5, 1.0,... 4.0 Let the bond face be F and the annualized coupon rates be ci,..., cs and the yield be y . The face value of the bond is F 100 . The coupon values are given by the digits of your student id, i.e. cid . The current time is to= 0.5+3. . Fill in the table below with the values of B((answers to two decimal places). 2 (2 d.p 8 (2 d.]p . Let the market price of the bond be Bmarket 100+ B Denote the yield corresponding to Bmarket be y. I. State which pair (y,y+2) gives a lower and upper bound for y*. 2. Call these values ow and high,SO highl2 and define ymid-(now yhigh)/2.0. 3. Calculate the bond price B(ymid). State the updated values of yow and yhigh for t 5. Calculate the updated value of ymid and the updated bond price B(mid). 6. STOP. No credit will be awarded if you attempt to iterate further the next iteration step