Question: Problem 5. Consider a bond with face value F = 100 dollars maturing in five years with coupons of C = 12 dollars paid annually,

Problem 5. Consider a bond with face value F = 100 dollars maturing in five years with coupons of C = 12 dollars paid annually, the last one at maturity. Suppose that the continuous compounding rate is r = 8%. Sketch the graph of the price of the coupon bond as a function of time.

Problem 6. How long will it take for the price of the coupon bond in Problem 5 to reach $120 for the first time?

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