Question: Problem 1. Consider two bonds: 1) a zero-coupon bond having a face value F and maturity 1 year; 2) a coupon bond with face value

Problem 1. Consider two bonds: 1) a zero-coupon bond having a

Problem 1. Consider two bonds: 1) a zero-coupon bond having a face value F and maturity 1 year; 2) a coupon bond with face value F, coupons C-15 paid annually and maturity 3 years. a) (5 pts) If F 100, find at the end of which year the price of the second bond will be for the b) (5 pts) If the price of the second bond is equal to 1.20 times the price of the first bond, find Assume that the continuously compounded interest rate is 10% first time below 110? the (common) face value F

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