Question: In this question, you will work with the pricing equation to show some results. A good start point is bond pricing equation P = (
In this question, you will work with the pricing equation to show some results. A good start point is bond pricing equation P C r rT Par rT where P is the price, C is the coupon, r is the yield, Par is the face value par and T the maturity date.
I Show that if a bond sells at par, then the coupon rate equals the yield.
II Show that if the coupon rate equals the yield, then a bond sells at par.
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