Question: Problem 2, Question 1 Interest rates are equal to 6% for every maturity. A 3-year bond with face value $800 offers an annual coupon rate

Problem 2, Question 1

Interest rates are equal to 6% for every maturity. A 3-year bond with face value $800 offers an annual coupon rate of 8%. A 2-year bond with an annual coupon $60 sells at par.

What is the price of the 3-year coupon bond?

a.

$789

b.

$800

c.

$725.4

d.

$1053.5

e.

$1010.7

f.

$842.8

g.

$935.8

h.

$885.5

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