Compute the bonds prices


Problem: Consider three Treasury bonds with 10 years to maturity. The three bonds differ only in their coupon rates-0%, 2%, and 4%-all of which are compounded semi-annually. Plot the relationship between price and yield-to-maturity for all three bonds on the same graph - i.e. for the three different coupons, compute the bonds' prices, and make a plot with yields on the x-axis and bond prices on the y-axis. Remember the bonds' cash flows are fixed. Label this graph clearly, so it is informative and easy to interpret.

 

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Finance Basics: Compute the bonds prices
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