Equation expressing the bond price in terms of yield

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Reference no: EM132007500

You purchase a coupon-bond whose face value is 100$, and whose coupon rate is 3% paid annually. The bond has a term of 5 years.

At time t= 0:

(a) Write the equation expressing the bond price in terms of the yield, and graph this relationship assuming the yield ranges in (?1,?).

(b) If the price is 102.20 $, use 10 steps of the bisection algorithm to approximate the yield . Write down your consecutive estimates in a table highlighting your final price estimate.

Reference no: EM132007500

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