INV3 P1a
Bond #
1
2
3
4
1 - year strip bond
2- year strip bond
2-year 6% coupon bond
2-year 7% coupon bond
Purchase Price for the bond)
950
?
Year 1 cash flow
1000
0
60
70
Year 2 cash flow
1060
1070
Yield to Maturity
5.50%
Fill in the missing pieces from the following table using the Law of One Price. Assume all these bonds have the same risk, the yield curve is flat, and any coupon payments are paid annually.
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