Question 9 A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of: A Two $500 zero coupon bonds maturing in 2 years В One $1,000 zero coupon bond...

Question 9<br>A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of:<br>A<br>Two $500 zero coupon bonds maturing in 2 years<br>В<br>One $1,000 zero coupon bond maturing in 2<br>years<br>One $1,060 zero coupon bond maturing in 2 year plus three $60 zeros with maturities at 2, 1, and 12 years<br>D<br>One $1,060 zero coupon bond maturing in 1 year plus four $60 zeros maturing on ½, 1, 1½, and 2 years<br>E<br>No, the arbitrage principle ensures that the market is in equilibrium<br>

Extracted text: Question 9 A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of: A Two $500 zero coupon bonds maturing in 2 years В One $1,000 zero coupon bond maturing in 2 years One $1,060 zero coupon bond maturing in 2 year plus three $60 zeros with maturities at 2, 1, and 12 years D One $1,060 zero coupon bond maturing in 1 year plus four $60 zeros maturing on ½, 1, 1½, and 2 years E No, the arbitrage principle ensures that the market is in equilibrium

Jun 04, 2022

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Question 9 A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of: A Two $500 zero coupon bonds maturing in 2 years В One $1,000 zero coupon bond...

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