A bond with face value of 1000 maturing in 21 months pays


Question: A bond with face value of $1000 maturing in 21 months pays semi-annual coupons (the remaining coupons will be paid at 3, 9, 15, and 21 months). Given the following information, determine the amount of each coupon. A call option on the bond with strike $1010 expiring in 1 year costs $10 A put option on the bond with strike $1010 expiring in 1 year costs $13 The continuous risk-free rate of interest is 7%.

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Finance Basics: A bond with face value of 1000 maturing in 21 months pays
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