What are the current prices of the two bond portfolios

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Question: You have two 10-year bond portfolios that make irregular semi-annual coupon payments as follows: The first bond portfolio has coupon payments of $50 in period 10 and 11 (i.e., after 5 years and after 5.5 years) and repays a face value of $1,000 at period 20 (i.e., after 10 years). The second bond portfolio has coupon payments of $50 in period 1 and period 20 and repays a face value of $1,000 at period 20. The term structure of interest rates is currently flat at 4% per semi-annual (6 month) period (i.e., r1=4%, r2=4%, r3=4%, r4=4% ......). What are the current prices of the two bond portfolios?

Reference no: EM133492103

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