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Determining the prices of the bonds

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Suppose that the bond market is represented by the payoff matrix 105 0 98 A= 8 108 and a price vector P = 95 Assume that the term structure is flat at 5% and that the bonds pay annual coupon. What will be the prices of the bonds 6 months before the coupon payment time, i.e., before bond one pays $105 and bond 2 pays $8?

Reference no: EM133070852

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