Question: Problem 3 (Required, 25 marks) We consider a 5-year straight term bond issued today. The bond pays coupon quarterly and the current annual effective yield

Problem 3 (Required, 25 marks) We consider a 5-year straight term

Problem 3 (Required, 25 marks) We consider a 5-year straight term bond issued today. The bond pays coupon quarterly and the current annual effective yield rate is i = 7.1859%. You are also given that The current bond price is 2167.529. The book value at the end of 15th month is 2130.929. Assuming that the yield rate remains unchanged over these 5 years, (a) find the book value of the bond at the end of 22nd month. (b) Find the market price of the bond at the end of 32nd month

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